Otherwise, the country may face different troubles including high inflation and surge in non-performing loans, the BB governor cautioned. By Sumi Khan. New Delhi/Mumbai, Dec 1 (IANS): Faster-than-anticipated economic recovery during Q2FY21 along with healthy macro-economic data points will persuade the Reserve Bank of India to maintain the growth-boosting accommodative stance in the upcoming monetary policy review. Monetary policies that are … Unveiling an expansionary and accommodative monetary policy statement (MPS), Bangladesh Bank (BB) has projected domestic credit growth ceiling at 19.3 percent in the fiscal year 2020-21 (FY21) accommodating 14.80 percent credit growth in private sector and 44.4 percent in public sector. Unveiling an ‘expansionary and accommodative’ monetary policy statement (MPS), Bangladesh Bank (BB) has projected domestic credit growth ceiling at 19.3 percent in the fiscal year 2020-21 (FY21) accommodating 14.80 percent credit growth in private sector and 44.4 percent in public sector. Expansionary monetary policy involves an increase in money supply which in turn increases aggregate demand. He said the key considerations of this MPS would, therefore, be to adopt a strategy so that the adequate financing support will be available to all the priority sectors like agriculture, CMSMEs, manufacturing industries and so on with the options of necessary adjustment to match the demand of the specific sectors where essential. In particular, some critics have argued that the Fed's asset purchases, and accommodative monetary policy more generally, encourage capital flows to emerging market economies. Mentioning the bank rate cut announcement a rational decision, Ahsan H Mansur said that the excessive flow of liquidity in the market must be avoided as such money could lead asset market inflation. GPO Box No. On the other hand, persistently high inflation will deter the RBI's Monetary Policy Committee to administer a … He said all these policy measures are taken to help generate employment opportunities in agriculture, industry and services sectors so that the COVID-19 pandemic related economic losses could be recovered fast. accommodative monetary policy in the United States. Accommodative monetary policy means a policy of allowing the money supply to rise in line with national income and the demand for money. It boosts economic growth. He, however, was doubtful about the government’s and the BB’s ambitions of making the country’s economic activities vibrant as it was before the coronavirus outbreak. It is the opposite of contractionary monetary policy. Otherwise, people may invest their money in non-productive sectors, they said, adding that the central bank should have to tighten the money supply, if necessary. Moreover, he said, the bank rate which remained unchanged for the last 17 years (since 2003) has also been considered to be reduced from 5 percent to 4 percent to rationalize it with the current interest rate regime and all these rates change will be in effect soon. Meaning in Economic Terms – This happens when a central bank (RBI) attempts to expand the overall money supply to boost the economy when the economic growth is slowing down.The major aim is to increase spending. BB will remain fully engaged and vigilant in monitoring and taking timely actions, where necessary, he added. GPO Box No. These capital flows are said to cause undesirable currency appreciation, too much liquidity leading to asset bubbles or inflation, or economic disruptions as capital inflows quickly give way to outflows. Published: 23:18, Jul 29,2020. 3. The prime objective is to bring back economic activities to normalcy as those were before the coronavirus outbreak, keeping inflation under control, the BB governor said. Accommodative monetary policy is when central banks expand the money supply to boost the economy. He, however, asked the banks to ensure the flow of fund to the productive, labour intensive and environment-friendly sectors. The money that would be created against the government’s bank borrowing, central bank’s refinance scheme and foreign asset must be utilised cautiously for the productive sectors, he said. In the MPS, the central bank said, ‘The prime objectives of the monetary policy stance and monetary programmes for FY21 are the recovery of the economy from the adversity of the coronavirus pandemic and rehabilitation of the production capacity including restoration of the normal livelihoods of the people along with maintaining dual goals of price stability and quality growth.’, In a written statement on the monetary policy, BB governor Fazle Kabir said, ‘It is clear, the monetary policy stance and monetary programmes for FY21 are expansionary and accommodative.’. Unveiling an ‘expansionary and accommodative’ monetary policy statement (MPS), Bangladesh Bank (BB) has projected domestic credit growth ceiling at 19.3 percent in the fiscal year 2020-21 (FY21) accommodating 14.80 percent credit growth in private sector and 44.4 percent in public sector.… “As a part of BB’s expansionary monetary policy stance and supporting the preparedness for additional demand for funds, this MPS is proposing a further cut in the overnight repo rate from 5.25 percent to 4.75 percent and a reduction of reverse repo rate from 4.75 percent to 4 percent, ensuring the availability of less costly funds for banks and rationalizing the policy rates’ corridor (the gap between the repo and reverse repo rates),” he added. Expansionary monetary policy is when a central bank uses its tools to stimulate the economy. 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