Bangladesh Bank (BB) will certainly be comforted with the bumper crop production this year, but ructions in commodity markets still hold some weight for the central bank before announcing the new monetary policy later this week, reports BSS.
Governor Dr Atiur Rahman is set to announce the monetary policy for the first half of the current 2011-12 fiscal on Wednesday, presumably keeping inflation, investment and credit flow on the forecourt of the prime agendum of the central bank.
Speculations are also there that the governor would take a tough stand against unnecessary import to push the policy brake hard on the shrinking current account surplus.
Post budget discussions had left a wide skepticism on whether a monetary policy alone can tame the inflationary pressure and help restrain the soaring commodity prices.
During the discussions, economists and experts were of the opinion that the new monetary policy should address inflation, shrinking current account surplus and investment with more effective policy measures. They were also concerned about the emerging risks of crowding out of the private sector in case of extensive borrowing for financing public sectors.
Most of the economists observed that the monetary policy responses to the macro-economic situation were so far in the right directions. For instance, they listed abolishing 13 percent lending cap, allowing depreciation of Taka against US dollar, directing commercial banks to reduce their lending to deposit ratio and increasing cash reserve ration (CRR) and statutory liquidity ratio (SLR).
The governor is expected to maintain the expansionary policy with more precise measures to control inflation, increase productive investment and control luxury import and investment in the unproductive sectors.
A BB official said the new policy would also focus on creating employment in the formal sector to help achieve the fiscal target of 7 percent growth.
Like previous policies, the new one would continue support to the agriculture sector and small and medium enterprises, the official said.
He said the new policy would tighten further the credit flow to non-productive sector while it would ease further the lending to imports of essential commodities to contain inflation.
-With BSS/The News Today input
