CPD Policy Brief 2021 (02)
CPD’s Reaction to the MPS FY2021-22
To What Extent Does Monetary Policy Meet the Needs of the Economy?
The monetary policy of FY2021–22 appears to be a cautious policy during the chaotic times of the pandemic. The central bank has refrained from taking any active steps in reducing the prevailing excess liquidity in the banking system, but has assured that it will not hesitate to take action if the need arises. The overall stance of the policy is expansionary, and in the words of the central bank, “accommodative”. It appears that the targets set for private sector credit growth and economic growth may not be met, considering the rapid worsening of the COVID-19 situation. Finally, governance of the banking sector will be an important determinant for better recovery of the economy. Unfortunately, reforms in the banking sector remain outside the radar of the central bank.
Authors: Fahmida Khatun and Syed Yusuf Saadat
Publication period: December 2021