The Bangladesh Bank (BB) has set the private credit growth target at 14.1 per cent in its monetary policy for FY23.
The target is 0.7 percentage point lower from the current fiscal year, which is 14.8 per cent.
The central bank unveiled the monetary policy for FY23 on Thursday.
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For the FY23, the gross domestic product (GDP) target has been set at 7.5 per cent while inflation target at 5.6 per cent, however, inflation was 7.42 per cent in May.
To tackle the current inflationary pressure Bangladesh Bank set cautious monetary policy. According to experts, cautious monetary policy is needed to tackle the inflation but achieving growth target will be difficult.
BB Governor Fazle Kabir said, “The main challenge of monetary policy for the new financial year is to keep inflation and exchange rate stable. At the same time to continue the economic recovery program by creating employment.”
“In view of this, cautious policy stance with a tightening bias to control the upward pressure on inflation and stabilises the exchange rate,” he added.
To tackle inflation, the central bank also decided to increase repo rate (which is usually known as policy rate) further by 50 basis points to 5.5 per cent.
In this context, the BB governor said, “To ease demand-driven inflationary pressures, repo rates have been raised as a matter of policy to ensure credit supply to investment and employment generating sectors.”
Earlier in May 29, the central bank increased its policy rate by 25 basis points to 5 per cent in a bid to keep the country's inflation in check.
