The Bangladesh Bank on Thursday declared monetary policy statement for the July-December period of the 2024-25 financial year, keeping policy rate unchanged.
鈥楩or the first half of FY25, the central bank will maintain a cautiously tight monetary policy stance, keeping the policy (repo) rate at 8.50 per cent, the SDF rate at 7 per cent and the SLF rate at 10 per cent unchanged,鈥� the MPS said.
The move may ease rising lending rate which have already increased to nearly 15 per cent, BB officials said.
鈥楤angladesh鈥檚 near-term macroeconomic challenges, include inflation, exchange rate volatility, fiscal constraints and financial sector stability. Addressing these issues requires a multifaceted approach involving prudent monetary policy, effective fiscal management and structural reforms,鈥� it said.
鈥楶ersistently high inflation erodes purchasing power and real incomes, exacerbating income inequalities,鈥� the MPS said.
It blamed geopolitical tensions, such as the Russia-Ukraine conflict and unrests in the Middle East, for disrupting global supply chains and driving up prices for essential commodities like food and energy.
鈥楾he BB has adopted a contractionary monetary policy to manage inflation, but balancing this with economic growth remains delicate,鈥� it said.
The central bank aims to bring down inflation to 6.5 per cent at the end of FY25 while the inflation remained over 9 per cent since March 2023.
In the new monetary policy, the growth target for private sector credit remains unchanged.
The private sector credit growth was 9.8 per cent as of June 2024 and this rate is set to continue until December.
On the other hand, the growth in public sector credit reached 12.8 per cent by the end of June.
But, the new monetary policy aims to increase the growth target for the public sector credit to 14.2 per cent, which means the government will have greater access to borrowing from the banking sector.
Additionally, the central bank has announced that it will not increase the money supply by printing new currency (reserve money).
In June, the growth of reserve money was 7.9 per cent. The goal is to reduce this growth to 2 per cent by December, the MPS said.
The BB has decided to keep the crawling peg mid-rate unchanged at Tk 117 a dollar.
It will also enhance import liberalisation by removing LC margin requirements for all products except luxury goods like cars, fruits, flowers, cosmetics and similar items, with margins determined based on bank-customer relationships, the MPS mentioned.
The BB acknowledged that high non-performing loans undermined financial stability and limited credit availability for productive investments.
The central bank is implementing measures to reduce NPLs and improve governance within banks, emphasising transparency, governance and operational efficiency, it claimed.
The Bangladesh Bank governor and the other senior officials of the central bank usually announced the monetary policy through a press conference, allowing reporters to ask questions about banking sector and economy.
But, this time the central bank released the MPS on its web site on Thursday.
Economic Reporters Forum general Secretary Abul Kashem in a statement said that the policy was secretly posted on the central bank鈥檚 web site, avoiding the usual press conference.
鈥楧ue to a lack of courage to answer possible questions from the media about corruptions in the financial sector, weakness of the banking sector, failure of the Bangladesh Bank on various issues, including inflation control, the Bangladesh Bank published the monetary policy on its web site secretly,鈥� he said.
BB spokesperson and executive director Saiful Islam rejected the allegation and said that the BB published the MPS on its web site, as the central bank feared that economic reporters might boycott the briefing, if arranged.
