Policy rate cut to boost investment

Hopes FBCCI president

President of Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Abdul Matlub Ahmad welcomed the new monetary policy statement (MPS), announced by Bangladesh Bank (BB) on Thursday, reports BSS. Terming the new MPS practical and realistic, the chief of the country's apex chamber-body, FBCCI, said the fresh policy stance of BB would help the country's economy perform better than all projections. He said the policy stance of lowering interest rate would help accelerate investment and industrialisation, which would eventually support the country attain 7.0 per cent GDP (gross domestic product) growth.
Ahmad observed that the new MPS focused on two major issues - managing lower inflation and bringing down lending rate.
The central bank announced the MPS for the second half of the current 2015-16 financial year, lowering the key policy rate or repo and reverse repo by 0.5 per cent to 6.75 per cent and 4.75 per cent respectively.
Announcing the MPS, BB Governor Dr Atiur Rahman said the key policy stance of the central bank's policy is to achieve higher growth with
lower inflation.
"Managing low-level of inflation while expediting GDP growth would help improve the lifestyle, especially of the poor people of the country," the FBCCI chief said.
On the other hand, he expects the BB's policy rate cut would help banks lower their lending rate, which is a major demand of the country's business community.
The FBCCI along with other major
chambers, trade bodies and associations have long been demanding lowering lending rate to single digit.
In response to the demands, Finance Minister AMA Muhith said the government would not directly lower the banks' lending rates since the banks are allowed to determine their lending and deposit rates independently.
He, however, said the central bank would take policy stance to help banks lower interest rates.
The central bank earlier advised banks that they should keep the spread (difference between deposit and lending rates) below 5.0 per cent, which prompted banks to lower their lending rates. But, in most cases, the lending rates remained above double digit.
The FBCCI president said the BB's cut in repo and reverse repo rate would be effective in
bringing down the lending rate of banks to the desired level.
He, however, pointed out that the
existing non-performing loan is a major hindrance to reducing lending rate. So, the chamber leader suggested all concerned to be more sincere in bringing down the non-
performing loan.
"The lending rate would fall even to
2-3 per cent if the non-performing loan comes down," Ahmad said.
On behalf of the country's business community, Ahmad welcomed the MPS.

 

Policy rate cut to boost investment

Hopes FBCCI president

President of Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Abdul Matlub Ahmad welcomed the new monetary policy statement (MPS), announced by Bangladesh Bank (BB) on Thursday, reports BSS. Terming the new MPS practical and realistic, the chief of the countrys apex chamber-body, FBCCI, said the fresh policy stance of BB would help the countrys economy perform better than all projections. He said the policy stance of lowering interest rate would help accelerate investment and industrialisation, which would eventually support the country attain 7.0 per cent GDP (gross domestic product) growth. Ahmad observed that the new MPS focused on two major issues - managing lower inflation and bringing down lending rate. The central bank announced the MPS for the second half of the current 2015-16 financial year, lowering the key policy rate or repo and reverse repo by 0.5 per cent to 6.75 per cent and 4.75 per cent respectively. Announcing the MPS, BB Governor Dr Atiur Rahman said the key policy stance of the central banks policy is to achieve higher growth with lower inflation. Managing low-level of inflation while expediting GDP growth would help improve the lifestyle, especially of the poor people of the country, the FBCCI chief said. On the other hand, he expects the BBs policy rate cut would help banks lower their lending rate, which is a major demand of the countrys business community. The FBCCI along with other major chambers, trade bodies and associations have long been demanding lowering lending rate to single digit. In response to the demands, Finance Minister AMA Muhith said the government would not directly lower the banks lending rates since the banks are allowed to determine their lending and deposit rates independently. He, however, said the central bank would take policy stance to help banks lower interest rates. The central bank earlier advised banks that they should keep the spread (difference between deposit and lending rates) below 5.0 per cent, which prompted banks to lower their lending rates. But, in most cases, the lending rates remained above double digit. The FBCCI president said the BBs cut in repo and reverse repo rate would be effective in bringing down the lending rate of banks to the desired level. He, however, pointed out that the existing non-performing loan is a major hindrance to reducing lending rate. So, the chamber leader suggested all concerned to be more sincere in bringing down the non- performing loan. The lending rate would fall even to 2-3 per cent if the non-performing loan comes down, Ahmad said. On behalf of the countrys business community, Ahmad welcomed the MPS.