DHAKA, Jan. 29 (Xinhua) — The central bank of Bangladesh on Sunday rolled out its monetary policy for the second half of the current fiscal year ending June 2017, and set policies that support the government’s efforts to rein in inflation and foster economic growth.
Bangladesh Bank (BB) said the main objective of the half yearly monetary policy, spanning from January to July 2017, is price stability, alongside supporting inclusive output and employment growth.
BB has been making efforts to nudge the economy in the desired direction through addressing long-term sustainability concerns, by supporting an inclusive, job-intensive, and environmentally sustainable growth, BB Governor Fazle Kabir said, unveiling the policy at a press conference Sunday.
According to the bank’s Monetary Policy Statement (MPS), the country’s growth is projected to be above 7 percent (7-plus) in the current 2016-17 fiscal year.
“Sustainable finance can help foster social cohesion and long-term macroeconomic stability, which are critical for a rapidly growing, manufacturing-led economy, with a relatively large, young population and with exposure to weather shocks and climate change vulnerabilities,” the MPS noted.
BB governor said the monetary program takes into account the recent economic and financial sector developments and will target a monetary growth path aiming at keeping average inflation below 5.8 percent. According to the bank’s Monetary Policy Statement, inflation has been steadily coming down to 5.03 percent (point-to-point) in December 2016, pulling down annual average to 5.5 percent,benefiting from both favorable food and non-food inflation dynamics.
Based on the BB’s analytical models and the recent economic developments, average inflation is projected to be within 5.3-5.6 percent in June 2017, said the statement.
BB governor said the monetary program framework is based on the ceilings for broad money and reserve money growth of 15.5 and 14.0 percent, respectively.
“This is consistent with domestic credit growth within 16.4 percent and private sector credit growth within 16.5 percent by June 2017.”
Bangladesh Bank said these are indicative ceilings deemed sufficient to accommodate projected GDP growth target , even allowing for some unforeseen extra growth spurt.
Bangladeshi Planning Minister AHM Mustafa Kamal said earlier this month said the economy is expected to grow 7.5 percent in 2016-17 financial year, a tad higher than the previous estimate of 7.2 as the economic fundamentals look strong.
Though the World Bank in a report recently predicted that Bangladesh’s gross domestic product (GDP) is to grow 6.8 percent in the current 2016-17 fiscal year due to domestic security challenges, weak external demand and a mild pickup in private investment.
Bangladeshi parliament passed 3.41 trillion taka (42.58 billion U.S. dollars) national budget last June for 2016-17 fiscal year, targeting an economic growth of 7.2 percent.