Staff Correspondent bdnews24.com
Published: 2017-07-26 16:53:24 BdST
The policy for July-December sets a domestic credit growth ceiling at 15.8 percent, a level consistent with growth and inflation objectives, the central bank said on Wednesday. A 16.3 percent credit growth target has been set for the private sector.
For January to June of 2017, the private sector credit growth ceiling had been set at 16.5 percent. Private sector loans had increased 16.3 percent as of May, according to the latest statistics.
The central bank flagged risks to its growth and inflation outlook and said that while interest rates are unchanged for now, it stands ready for any adjustment.
The benchmark repo rate remains unchanged at 6.75 percent following a review. The central bank said policy will be aimed at keeping average inflation below 5.5 percent in the new fiscal year while helping the government meet its 7.4 percent growth target.
Governor Fazle Kabir said that it was definitely possible to attain the 7.4 percent GDP growth and 5.5 percent inflation rate outlined in the 2017-18 budget with this monetary policy.
“Returns from savings certificates will, of course, be adjusted according to the interest rate,” he said in response to a question.
Inflation was 5.94 percent on a point-to-point basis in June, according to the Bangladesh Bureau of Statistics or BBS. Average inflation for the last fiscal year was 5.44 percent.
In the monetary policy statement, the BB said higher food costs following a flood could also stoke price pressures ahead.
The 2016-17 budget had set a GDP target of 7.2 percent. The GDP growth at the end of the last fiscal year had been estimated at 7.24 percent by the BBS.
The Bangladesh Bank announces two monetary policy statements each year to ensure that the budget guide the country’s economic policy along the right path.
The economy has been battered by Brexit and a slump in global oil costs. Its main exports -- garments, which account for about 80 percent of total shipments -- have been hurt by the slump in the sterling, while labourers in the Middle East have been sending home smaller remittances.
Exports grew 1.7 percent in the fiscal year to Jun 30, the slowest pace in 15 years. Remittances fell 14.5 percent.
Inflows from workers abroad are equal to some 6 percent of Bangladesh’s gross domestic product, according to the World Bank.