BB likely to unveil contractionary MPS on January 15

Business Report :
A contractionary monetary policy stance (MPS) is ready for unveiling, meant for the second half of FY24, as Bangladesh Bank is set to make inflation-combating a priority of the new cabinet.

The central bank is likely to unveil on January 15 the MPS, sources said.

The Bangladesh Bank now needs two more procedures before placing it before the media on January 15.

One is the Monetary Policy Committee meeting which was scheduled to be held Thursday, but postponed following the oath-taking ceremony of the new cabinet of the ruling Awami League.

The central bank’s board also needs to approve it in its next board meeting to be held on January 14, sources added.

The target for private sector credit was 10.9% for up to December 2023. But, at the end of November, it was recorded at 9.9%.

The broad money target for December 2023 was 9.5%, and at the end of November, it was 8.65%.

The inflation rate was high at 9.49% in November, in a stark contrast to fall in most other countries.

The last MPS introduced monetary targeting to an interest rate-targeting framework.

Second, Bangladesh Bank intended to introduce a market-driven reference lending rate for all types of bank loans, replacing the previously imposed lending-rate cap.

This move aimed to enhance competitiveness in the banking sector and foster a favorable lending environment for businesses and individuals.

The reference lending rate, known as six-month moving average rate of Treasury bill (Smart), announced monthly through the BB website, with a margin applied to banks and non-bank financial institutions (NBFIs.)