BB brings changes in MPS for FY21

Bangladesh Bank (BB) has brought some changes in money and credit line of its Monetary Policy Statement (MPS) for the fiscal 2020-21, taking into account the money market and the overall macroeconomic situation.

The decisions were taken at the 50th meeting of the Monetary Policy Committee (MPC) held at the Bangladesh Bank (BB) headquarters in the city on Sunday with BB Governor Fazle Kabir in the chair, said a press release today.

As per the press release, the central bank has already brought down its GDP growth projection to 7.40 percent from its earlier projection of 8.20 percent for the FY’21 mainly due to the ongoing Covid-19 pandemic.

The revisions will not, however, prevent the BB from pursuing the ongoing expansionary monetary policy until June next, said the release.

It added that the BB has adjusted some programmes upwards and some downwards, and kept some measures unchanged in the wake of the developments emerged in the money market.

The target of the country’s aggregate money supply, measured by broad money (M2), has been re-fixed at 15 percent instead of 15.60 percent earlier.

However, the growth in credit to the private sector has remained unchanged at 14.8 percent, considering the possibility of normal of economic activity in the near future after the impact of the coronavirus pandemic.

The BB has also kept unchanged the annual average inflation rate at 5.40 percent for the fiscal 2020-21.

It revised down the target of Net Foreign Assets (NFA) at 20.1 percent until June 2021 instead of 30.8 percent set for December, 2020.

The central bank made an upward adjustment of net domestic assets at 13.6 percent from December’s actual growth of 9.8 percent.

The reserve money or the currency in circulation, the banks’ deposit with the central bank and the other deposits with the central bank are kept unchanged at 13.5 percent.

The growth of the reserve money was 21.3 percent in December 2020 (actual).

The central bank has projected the government’s borrowing at 31.7 percent in the revised the monetary policy programmes for the fiscal 2020-21.

The growth in public sector credit until December 2020 was 17.2 percent (net).