BB to declare MPS tomorrow, major changes unlikely

Staff Correspondent | Published: 22:07, Jul 29,2018 | Updated: 00:35, Jul 30,2018

 
 

A file photo shows the Bangladesh Bank headquarters at Motijheel in Dhaka.-- New Age

Bangladesh Bank is set to announce tomorrow monetary policy for the first half (July-December) of the fiscal year of 2018-2019 with a view to helping the government achieve budgetary growth targets and keeping inflation under control.
Keeping inflation under control would be very tough in the first half of the fiscal year ahead of the national polls, expected to be held by the end of 2018, as money flow would increase significantly in the period, central bank officials said on Sunday.
Besides, the Awami League-led government ahead of the polls might increase bank borrowing to implement the annual development programme significantly with a view to satisfying people, they said.
The overall government borrowing from the banks was slightly negative in FY 2017-18 against the 8.3-per cent growth target set by the BB.
BB officials said that the central bank was likely to keep credit growth target for the July-December period of FY19 unchanged.
The monetary policy statement for the period, however, would also focus on supporting government’s projection to attain 7.8 per cent gross domestic product growth in FY19, they said.
In the monetary policy for the second half of FY18, the BB projected to keep the private sector credit growth target within 16.8 per cent.
The private sector credit growth, however, posted 16.95 per cent growth in the period.
Growing volume of trade deficit, the gap between import payments and export proceeds receipt, is another major consideration of the central bank, BB officials said.
The rate of the US dollar against Bangladeshi taka has remained high at around Tk 83.75 due to increased demand for the greenbacks that widened trade deficit creating pressure on the central bank to keep inflation within the target, they said.
Country’s trade deficit soared by 84 per cent to $17.2 billion in the July-May period of the just concluded fiscal year (2017-2018) as import payments surged past $50 billion in the 11 months.
Current account balance also reached negative $9.3 billion in the first 11 months of FY18, according to the latest BB data.
The gap in trade balance and current account
balance was $9.3 billion and $2.2 billion
respectively in the same period of the previous fiscal year (2016-2017), the data showed.

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