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  • The Key Points of The Monetary Policy From July To December 2023 BD

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    Monetary Policy July to December 2023 BD

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    The key points of the Monetary Policy from July to December 2023 BD

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    Monetary Policy July to December 2023 BD

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    8 views2 pages

    The Key Points of The Monetary Policy From July To December 2023 BD

    Uploaded by

    sn n
    Monetary Policy July to December 2023 BD

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    of 2

    The key points of the Monetary Policy from July to December 2023 are as follows:

    1. The primary objective is to contain inflation and ensure a stable and favorable
    business environment.
    2. The monetary policy stance will be contractionary, aimed at reducing aggregate
    demand in the economy.
    3. The transition will be made from a monetary targeting framework to an interest rate
    targeting framework.
    4. The target policy interest rate will be set at 6.50 percent, with a symmetric corridor
    of ±200 basis points.
    5. The interbank call money rate will closely align with the policy rate to ensure
    stability.
    6. Lending activities for all purposes will be conducted at the SMART (Six months
    moving average rate of Treasury bill) plus a margin of up to 3.00 percent for banks
    and up to 5.00 percent for non-bank financial institutions (NBFIs).
    7. The existing lending rate caps will be removed.
    8. Lending activities for CMSMEs and consumer loans may be subject to an
    additional fee of up to 1.00 percent to cover supervision costs.
    9. There will be no changes in the interest rates applicable to credit card loans.
    10. Exchange rate unification will be implemented.
    11. The policy rates, including the repo rate and the SDF rate, will be adjusted upward
    to raise the cost of borrowing and limit CPI inflation.

    SOURCES:
    - Page 4: Monetary Policy Statement July-December 2023
    - Page 7: Inflation, improving the current account balance, managing exchange rate
    instability and keeping adequate foreign exchange reserves, stabilizing the financial
    sector, and strengthening the capital market.
    - Page 37: Calculation of the reference lending rate and the announcement of lending
    activities at SMART plus a margin.
    - Page 41: Increase in policy rates and monetary and credit projections.
    The key points of the Monetary Policy from July to December 2023 are as follows:

    1. Lending Activities: Effective from 1 July 2023, lending activities for all purposes
    will be conducted at the SMART (Six months moving average rate of Treasury bill)
    plus a margin of up to 3.00 percent for banks and SMART plus a margin of up to 5.00
    percent for non-bank financial institutions (NBFIs). The existing lending rate caps
    will be removed, except for credit card loans. CMSMEs and consumer loans may be
    subject to an additional fee of up to 1.00 percent to cover supervision costs.

    2. Exchange Rate Unification: The Monetary Policy Statement (MPS) intends to


    announce the unification of the exchange rate.

    3. Policy Rates: The policy rate, repo rate, will be adjusted upward by 50 basis points
    from 6.00 percent to 6.50 percent, while the SDF rate (previously known as reverse
    repo rate) will be adjusted upward by 25 basis points from 4.25 percent to 4.50
    percent, effective from 1 July 2023. This measure aims to raise the cost of borrowing
    and limit CPI inflation.

    4. Monetary and Credit Projections: Although the monetary policy no longer


    explicitly sets targets for broad money and reserve money growth, projections for M2
    and M3 will be established in alignment with the policy interest rate target. The
    positive trend in money velocity is expected to continue in FY24.

    5. Consultations and Expert Input: The formulation of the Monetary Policy Statement
    involves in-person consultations with macroeconomic experts, policymakers, analysts,
    and leaders from the financial and business sectors. Their opinions, suggestions, and
    guidance are considered in establishing the monetary and credit projections.

    SOURCES:
    - Page 4: Monetary Policy Statement July-December 2023
    - Page 37: Calculation of Reference Lending Rate
    - Page 41: Monetary and Credit Projections
    - Page 9: Formulation of Monetary Policy Statement

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