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BB unveils monetary policy aims to check inflation

News Desk | banglanews24.com
Update: 2022-06-30 20:06:07
BB unveils monetary policy aims to check inflation Photo Collected

Bangladesh Bank today (June 30) has unveiled the monetary policy for the first half of the fiscal year with an ambitious target of taming inflation and keeping the foreign exchange reserve stable.

The central bank governor Fazle Kabir announced the monetary policy for FY23 at a press conference at the central bank headquarters in Dhaka.

He said: "We will take all-out action to tame inflation. To keep the foreign exchange reserve stable, the central bank will anyhow discourage unnecessary import."

Fazle Kabir said BB has decided to increase its policy rate (the repo rate) by 50 basis points to 5.50 percent from 5.00 percent to deal with the demand side pressures along with ensuring the required flow of funds to the priority and productive sectors to promote supply-side activities.

He said the monetary policy also seeks to promote import-substituting economic activities and dissuade imports of luxury goods, fruits, non-cereal foods, canned and processed foods, etc., to reduce exchange rate depreciating pressure, protect foreign exchange reserves, and control inflation.

"In this respect, BB will introduce a new refinance line of credit for import-substituting products to minimize import dependency and save valuable foreign exchange reserves. The LC margins for luxury goods, fruits, non-cereal foods, canned and processed foods, etc., will be increased comprehensively to discourage their imports," he added.

He said BB will continue its support to implement the government's ongoing stimulus packages alongside BB's refinance schemes in the face of new adversities, including the Russia-Ukraine war in addition to the COVID-19 pandemic.

He mentioned that BB formulates its monetary policy stance and designs monetary and credit programs based on macroeconomic updates and outlooks at home and abroad, subject to any mid-course revision if necessary.

Fazle Kabir, however, said the central bank has been playing a pivotal role with various supportive financial sector policies, backing the government's stimulus packages to counteract the pandemic-induced economic disruptions. 

"BB emphasized ensuring enough loanable funds at low costs for banks and Non-Bank Financial Institutions (NBFIs) to recover the economy from the pandemic-related economic adversities. A total of 28 stimulus packages amounting to about Taka 2.0 trillion (of which BB is implementing 10 stimulus packages amounting to nearly Taka 1.7 trillion) have supported the affected businesses to continue their activities, contributing to investment and employment," he added.

He said BB has continued its other policy supports for the financial sector, such as affordable and reliable financial services, especially digital payments and credit, and raising awareness of financial education and financial inclusion, especially for women. 

BDST: 2005 HRS, JUNE 30, 2022
MSK
 

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