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Bangladesh bank as a central of the country mainly focuses two goals in each monetary
policy. These two goals are moderate inflation and sustainable growth. Inflation is not
fully controlled in an economy but it should be at a tolerable level for all. The other goals
of the monetary policy of the country are:
The major instruments of monetary policy by Bangladesh bank are mainly two types. These
are:
1. Open Market Operation (Repo, Reverse Repo and BB bill auction)
2. Variation in Reserve Ratio
The instruments can also be classified as follows:
assessment of global and domestic macro-economic conditions and outlook. This MPS was
preceded by productive consultations with a range of key stakeholders and web-based comments
were also received.
Target of Bangladesh Bank
GDP Growth target was 7.2%
Curb inflation to 7.5%
Private Sector Credit Growth Rate to 18%
Intermediate Targets
Target Adjustments in MPS
Broad money growth target reset to 17.7% from 16.5% in H1 FY13
Reserve Money Growth target reset at 16.1% from 14.5% earlier
Domestic Credit growth target revised Upward to 18.9% from earlier 17.2%
Private sector growth target of 18.5% from originally targeted 18%, with growth
reallocation
Impacts of the monetary policy
[
The average industrial sector growth was between 7.25-7.5% in FY13 which less than the
9.5% in FY12.
The share of loans to agriculture sector (from 5.5% in March 2013 to 5.8% in March
2014)
Trading activities has increased from 36.4% in March 2013 to 39.0% in March 2014
Industrial total outstanding credit decreased from 22.0% in March 2013 to 16.4% in
March 2014.
The share of working capital financing has grown (from 13.2% to 18.0% during this
period).
The share of construction loans has remained unchanged (at 9.5%) compared to a year
earlier.
to lower cost overseas financing with overall private sector credit growth, from both local and
foreign sources, amounting to 15.7% in May 2014. Domestic retail interest rates declined during
these six months but the spread between lending and deposit rates rose indicating that lending
rates have declined by less than deposit rates.
Adherence to the monetary program contributed to non-food point-to-point inflation falling from
9.09% in January 2013 to 5.16% in May 2014 though it rose to 5.45% in June 2014. Point to
point food inflation rose steadily from 5.02% to 9.09% during January 2013-May 2014 but fell to
8.00% in June 2014. Overall average inflation declined from 7.60% to 7.35% during H2FY14
largely driven by the decline in non-food inflation.
GDP growth rate achieved 7.05% which touches the highest point of GDP growth rate in
the economy of Bangladesh.