"We'll not support growth at the cost of inflation," says governor Fazle Kabir

The central bank unveiled Wednesday country's monetary policy for July-December period targeting 12.9 per cent expansion in money supply.

It described the expansion "accommodative" with the projected economic growth for the current financial year, but economists found the stance 'cautious'.

Broad money, which includes demand deposits with commercial banks, and any monies held in easy-accessible accounts, has been programmed up to December to grow 12.9 per cent.

And up to June next, the rate rises 1.0 percentage point to 13.9 per cent.

Such monetary stance is in keeping with the targeted gross domestic product (GDP) growth at 7.4 per cent, set in the national budget for the current fiscal year (FY) 2017-18, the Bangladesh Bank said.

Reserve money, whose components are currency in circulation, bankers' deposits with the central bank and other deposits with the Bangladesh Bank, has been programmed at 12 per cent up to June.

The money circulation from now on will be estimated on annual-average basis instead of point-to-point basis.

Public-sector-credit growth, which had plunged into a negative 16 per cent up to last May, now has been projected to expand at 3.8 per cent up to December and much higher at 12.1 per cent at the end of the financial year as the government may need funds for non-implementation of the VAT Act 2012.

However, the Bangladesh Bank Governor, Fazle Kabir, while delivering his speech at the MPS- launching programme at the BB headquarters, said this monetary-policy stance is growth- supportive as well as conducive to employment.

"We'll not support growth at the cost of inflation," said the governor, whose bank reigns over the country's monetary system.      

Mr. Fazle Kabir, however, sees two challenges in executing the MPS: higher yields on national savings certificates and falling trend in remittance by the country's expatriate nationals.

He suggests the yields on the savings certificates should be consistent with the market rates.  And for augmenting the remittance inflows through formal channels the central bank is working on effective ways.

The governor feels no need for changes in the policy rates for the time being-the central bank will take instant measures if necessary.

He notices an upturn in food inflation on the back of floods in northeastern haor areas. "We expect inflation will remain tolerable as India has less than 2.0 per cent inflation along with low prices of some key commodities on the global market."

Mr. Kabir said the central bank will facilitate 'angel' investment in the country to help the small startups or innovative entrepreneurs.

He said the venture-capital firms were seen not interested about the startups. "Even India is facilitating angel investment, so why not in the country."