Bangladesh Bank failed to bring down inflation rate to 7.5% set as target when it announced monetary policy statement for the second half of last fiscal.
The figures cited by the Governor Dr Atiur Rahman while presenting monetary policy statement for the first half of current fiscal on Thursday showed the failure in achieving the target.
However, the inflation dropped to 7.7% from 8.4% during the January-June period, said the central bank figures.
But the core inflation such as of non-food and non-fuel items is on a rising trend since April reflecting the aggregate demand pressures.
The retail interest rates also declined during last six months with the spread between lending and deposit rates dipping below 5%. The trend suggested that lending rates fell faster than deposit rates.
Besides, the private sector credit didn’t grow up to the target set at 18.5%. The growth reached 13.6% in May.
The figures showed that private credit growth from domestic sources fell to 11.4% in May from 19.7% in June last year.
Bangladesh Bureau of Statistics estimated GDP growth for fiscal 2012-13 at 6.03%.
Dr Atitur Rahman said the political instability and the banks’ stringent lending practices led to a slowdown in private sector credit growth.
According to BB data, the average inflation rate, using the 1995-96 base year, has been on steady decline over the past 15 months. During the period, the inflation fell to 7.7% in June from 10.96% in February last year.
The soaring of food prices also helped in the failure of lowering target of inflation.
BB chief said the government’s net borrowing from the banking system rose in the second half of last fiscal, although remained within the target set in national budget.
In last fiscal, the government’s net borrowing from the banking system stood at Tk248bn while the revised budget’s target was Tk285bn.