By CentralBankNews.info
    The central bank of Bangladesh lowered its repo and reverse repo rates by 50 basis points, citing “gains in inflation decline earned over last period and the need to realign the rates with the market.”
    It is the first rate cut by the Bangladesh Bank (BB) since a similar-size rate cut in January 2013. The repo rate cut is being cut to 6.75 percent and the reverse repo rate to 4.75 percent.
    “Based on commendable macro stability, it is high time to stimulate investment and thus growth where political calm beckons to use improved condition in market confidence,” the bank said in its monetary policy statement for January-June 2016.
    Bangladesh’s inflation rate rose slightly to 6.1 percent in December from 6.05 percent in November, but down from a 2015 high of 6.36 percent in July and highs close to 12 percent at the end of 2011.
    The central bank forecast inflation of 6.07 percent in June 2016 as some effects of pay rises in the government sector are likely to be canceled out by the dampening fuel and commodity prices.
    In its previous policy statement from July, the BB targeted average inflation of 6.2 percent for fiscal 2015/16.
    Domestic credit is projected to grow at 15. recent at the end of fiscal 2016 from 10.9 percent in December 2015, with the central bank saying it aims to stimulate investment, with a focus on expanding quality credit through an inclusivity approach.
    BB also said it had made a strategic shift in loan disbursement policy and all banks will be encouraged to substantially increase advances for micro, small and medium enterprises.

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