bangladesh bank monetary policy 2014 july to december
TRANSCRIPT
Bangladesh Bank
Monetary Policy
(July-December,
2014)
• regulates the supply of money
by targeting inflation rate or
interest rate of a country to
assure price stability
• contribute to economic growth
• assurance of low unemployment
• ensure predictable exchange
rates with other currencies.
Components
Monetary
Policy
Expansionary &
Contractionary Policy
Components of
monetary policy
Required Reserve Ratio
& Discount Window
Lending Rate
Open market Operations
& Moral Suasion
Statement Summary
• increases the total supply of
money in the economy more
rapidly than usual.
• expands the money supply more
slowly than usual or even shrinks it.
Components
Monetary Policy
Expansionary &
Contractionary
Policy
Components of
monetary policy
Required Reserve Ratio
& Discount Window
Lending Rate
Open market Operations
& Moral Suasion
Statement Summary
• Setting the required reserve
ratio
• Setting the discount window
lending rate
• Open market operations
• Moral suasion
Components
Monetary Policy
Expansionary &
Contractionary Policy
Components of
monetary policy
Required Reserve Ratio
& Discount Window
Lending Rate
Open market Operations
& Moral Suasion
Statement Summary
• limits the amount of money available in the economy by preventing banks from creating more money than the Central Bank desires.
• rate at which the Central Bank makes loans exclusively to other registered banks in times of financial and banking instability.
Components
Monetary Policy
Expansionary &
Contractionary Policy
Components of
monetary policy
Required Reserve
Ratio & Discount
Window Lending
Rate
Open market Operations
& Moral Suasion
Statement Summary
• buy and sell securities to and from the public and banks in what is known as Open market operations.
• encouraging people to take certain actions that have certain effects on the economy. This is generally the one with the least determinate effect and is heavily laden sociologically.
Components
Monetary Policy
Expansionary &
Contractionary Policy
Components of
monetary policy
Required Reserve Ratio
& Discount Window
Lending Rate
Open market
Operations &
Moral Suasion
Statement Summary
• Monetary policy aims to limit reserve
money growth to 15.5% and broad
money growth to 16% by December
2014
• The MPS has aimed average Inflation
bringing down below 6.5% by June
2015
• The policy emphasizes more
qualitative support and less on
quantitative support
Components
Monetary Policy
Expansionary &
Contractionary Policy
Components of
monetary policy
Required Reserve Ratio
& Discount Window
Lending Rate
Open market Operations
& Moral Suasion
Statement
Summary
• Policy rate is kept unchanged (7.25%)
• Private sector credit growth target is
target was 16.5%
• The size of the Export Development
Fund is raised from $1.2 billion to
$1.5 billion and the single party ceiling
of that fund is raised from $12 million
to $15 million.
Components
Monetary Policy
Expansionary &
Contractionary Policy
Components of
monetary policy
Required Reserve Ratio
& Discount Window
Lending Rate
Open market Operations
& Moral Suasion
Statement
Summary
• foreign investors are allowed to source
term loans from local banks
• the policy gave Importance on under-
served clients, government and
business payments by mobile phone
financial services, close monitoring of
SME and agricultural credit
• this policy mentioned strictly
following the applied ceilings on loan
growth
Components
Monetary Policy
Expansionary &
Contractionary Policy
Components of
monetary policy
Required Reserve Ratio
& Discount Window
Lending Rate
Open market Operations
& Moral Suasion
Statement
Summary
• MPS gave importance on
appropriate regulatory and policy
framework and mentioned longer
term savings like pension and
provident funds as a tentative
debt market participant
Components
Monetary Policy
Expansionary &
Contractionary Policy
Components of
monetary policy
Required Reserve Ratio
& Discount Window
Lending Rate
Open market Operations
& Moral Suasion
Statement
Summary