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Bangladesh bank monetary policy 2014 july to december
The document outlines Bangladesh Bank's Monetary Policy for July-December 2014. It discusses the objectives of monetary policy, which include regulating money supply to ensure price stability, economic growth and low unemployment. It also discusses the tools used in monetary policy, which include required reserve ratios, discount window lending rates, open market operations and moral suasion. The monetary policy statement aims to limit money growth while bringing inflation below 6.5% by June 2015 through both quantitative and qualitative measures. It also keeps policy rates unchanged and sets targets for private sector credit growth and export funding.
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Bangladesh bank monetary policy 2014 july to december
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- 2. • regulates thesupply 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
- 3. • increases thetotal 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
- 4. • Setting therequired 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
- 5. • limits theamount 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
- 6. • buy andsell 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
- 7. • Monetary policyaims 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
- 8. • Policy rateis 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
- 9. • foreign investorsare 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
- 10. • MPS gaveimportance 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