The recent monetary policy of Bangladesh BANK

The central bank declared its half-yearly monetary policy aiming to contain inflationary pressures through discouraging credit flow to unproductive sectors and for speculative purposes including real estates and investments in stock market beyond affordable limits.

While releasing the monetary policy statement (MPS) for July-December period of the current fiscal year, The governor of the central bank said that the monetary policies in fiscal year 2011-12 will need to continue in the restraining stance on credit growth as pursued in fiscal year 2011.
He also told that the policies, as before, will selectively bear down on growth of credit for wasteful, unproductive and speculative uses while ensuring adequate credit flows for all productive pursuits in manufacturing, agriculture, trade and other service sector.

Under the new monetary programme, domestic credit growth will come down to 20 per cent in June 2012 from an estimated 27 per cent in June this fiscal while credit growth to the private sector will be brought down to 18 per cent next fiscal from an estimated level of 25.5 per cent in the current one.

Explaining what the central bank would consider lending for speculative purposes in particular, BB Senior Consultant Mr. Allah Malek Kazemi said credit flows for purchases of land and apartments (flats), investments in shares beyond affordable levels and many other areas where bubble-and-bust situations prevail will be treated as credits for such purposes.

In fiscal year2011, the modest pool of predominantly short-term domestic savings was strained heavily by a spurt in longer-term credit demand for new private and public sector capital investments, much of which are normally expected to be financed with term borrowing and/or equity from external sources, the first half-yearly (H1) Monetary Policy