Bangladesh Bank will tighten the monetary policy further in the second half of the current fiscal year to curb inflation and pressure on foreign currency reserve and exchange rate.
It has set a target to bring private sector credit growth to 16 per cent by June from 18 per cent fixed earlier.
In its monetary policy statement for January-June of the current fiscal year, the central bank, however, said yesterday that the credit growth in private sector is healthy and is on track for achieving growth targets.
The credit growth in private sector was 18 per cent in December 2011 while it was 25.8 per cent in the last fiscal year.
It would require a cautious monetary policy and the government's prudent fiscal stance to achieve these targets, Central Bank Governor Atiur Rahman told reporters at his office in the capital.
"Besides, it is essential to ensure that the government borrowing does not crowd out available liquidity for commercial banks," he said.
The central bank said if government borrowing from the banking system comes down, the credit growth in private sector may rise.
It readjusted the projection for gross domestic product (GDP) between 6.5 and 7.0 per cent in the current fiscal year.
The national budget had forecast that the country's GDP would grow 7 per cent in the current fiscal year.
However, major donor agencies such as the World Bank and the International Monetary Fund projected the growth at 6 per cent.
The central bank said data on agricultural output and indicators of industrial and service sector performance for the first half of the current fiscal year suggest that if there is no change in the global environment, a 7 per cent growth is achievable.
However, Bangladesh's export and remittance growth may slow down due to the deterioration in global economic condition in recent months. “Moreover, weak aid inflows, slowing imports and moderating credit growth will limit aggregate demand,” said the statement.
The central bank said it would ensure adequate credit flow to the private sector to stimulate inclusive growth.
The monetary policy aims to bring down inflation to a single digit, which has been in double digits for the last nine months, the statement said.
Its other objective is to stem foreign reserve depletion. The country's foreign currency reserve came down to US$9.04 billion on January 18 from $10.91 billion on June 30 last year.
