Bangladesh holds rate, to mull easing when inflation falls

    The central bank of Bangladesh held its benchmark repurchase rate steady at 7.25 percent, but said "easing will be considered after point-to-point headline general inflation and core CPI inflation take a sustained declining trend."
    The Bangladesh Bank, which has maintained its rate since February 2013, said the current level of inflation is "moderate," but the government's 6.2 percent target for fiscal 2016, which began on July 1, "implies that we need to go for further reduction by slightly pressing the brake on the price level."
    The current level of money supply in Bangladesh is cautious but at the same time "generously accommodative for growth generating pursuits," the bank said.
    The central bank said general inflation eased to 6.40 percent in June from 6.87 percent in January but core inflation rose to 6.74 percent from 6.08 percent in January, warranting a cautious policy stance.
    "Gains in inflation declined earned over this period do not yet make a case for easing of policy interest rats, given that both headline point-to-point CPI inflation and core CPI inflation have edged up recently," the bank said, attributing the fall in inflation to declining food prices.
    The bank added that the fall in global fuel prices may have played a role in dampening inflationary concerns but the government did not adjust prices. Given that food occupies almost 60 percent of the consumption basket, this played a major role in pulling down inflation.
    The government of Bangladesh is targeting 7 percent economic growth in fiscal 2016 compared with an estimated 6.5 percent in fiscal 2015.
    Gross Domestic Product in 2014 grew by 6.12 percent in calendar 2014 and policymakers are aiming to break out of the pattern of growth around 6 percent that has persisted for the past 12 years.

Bangladesh holds rate, targets 6.5% inflation mid-2015

    The central bank of Bangladesh held its benchmark repurchase rate steady at 7.25 percent, along with the reverse repo at 5.25 percent, and urged commercial banks to come up with ways to reduce their lending rates which have not come down along with inflation.
    The Bangladesh Bank, which last changed its rate in February 2013 when it cut the repo rate by 50 basis points, said inflation has dropped by almost 5 percentage points since the end of 2011 but the average lending rate has only dropped by 1 percentage point, "empowering the banks to earn higher real rates of interest and thus making investment more expensive than before."
   In its monetary policy statement for January-June 2015, the central bank appealed to banks "to lend only to creditworthy clients who invest their funds for productive purposes and repay the installments regularly."
   While the government of Bangladesh has announced an inflation target of 5 percent by 2017, the central bank said it will strive to keep inflation at a moderate level that still ensure sufficient credit growth to stimulate growth, and set an inflation target of 6.5 percent to be achieved by June 2015.
    This will require limiting reserve money growth to 15.9 percent and broad money to 16.5 percent by June 2015. A ceiling for private sector credit growth of 15.5 percent is sufficient to accommodate any substantial rise in investment and trade finance over the next six months.
     Bangladesh's consumer price inflation fell to a 2014-low of 6.11 percent in December from 6.21 percent in November, well down from peaks close to 12 percent in 2011.

Bangladesh holds rate, aims to reduce inflation to 7 pct

    Bangladesh's central bank kept its policy rate steady at 7.75 percent and aims to bring inflation down to 7.0 percent "while ensuring that credit growth is sufficient to stimulate inclusive economic growth."
    The Bangladesh Bank (BB) said in its monetary policy statement for the second half of the current 2014 fiscal year that it would use both monetary and financial sector policy instruments to reach its inflation goal and specifically contain reserve money growth to 16.2 percent and broad money growth to 17.0 percent by the end of June 2014.
    "The persisting inflationary pressures over the past few months with the risks ahead related to the inflation outlook imply that achieving the FY14 target will be challenging," BB said.
    In its previous policy statement from July 2013, the BB aimed to limit reserve money growth to 15.5 percent and broad money growth to 17.2 percent by December 2013. Bangladesh's financial year begins on July 1.
    BB also said it expects a further build-up of foreign reserves in the current fiscal year though at a more moderate pace than last year when international reserves rose to US$18.1 billion by the end of December from $15.3 billion end of June 2013, sufficient for about 5-1/2 months of imports.
    "BB will continue to support a market-based exchange rate while seeking to avoid excessive
foreign exchange rate volatility," the central bank said.