Monetary Policy of Bangladesh

Introduction

Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment. Monetary theory provides insight into how to craft optimal monetary policy. It is referred to as either being expansionary or contractionary. Where an expansionary policy increases the total supply of money in the economy more rapidly than usual and contractionary policy expands the money supply more slowly than usual or even shrinks it. Expansionary policy is traditionally used to try to combat unemployment in a recession by lolling interest rates in the hope that easy credit will entire business into expanding. Contractionary policy is intended to slow inflations in hope of avoiding the resulting distortions and deterioration of asset values. The main objective of the study is to know about the monetary policy used in our country and also to know the monetary policy and its type, tools of monetary policy used by Bangladesh Bank and to know the strategy of monetary policy. The study “Monetary Policy in Bangladesh” has covered overall scenario of Macroeconomics situations of Bangladesh. By doing the assignment I am able to know that the importance of monetary policy of our growing economy. In the case study I discussed about the importance, types strategy of monetary policy and tools of monetary policy used by Bangladesh Bank.

Monetary Policy

The regulation of the money supply and interests rates by a central bank such as the central bank of Bangladesh in order to control the inflation and stabilize currency. Monetary Policy is one the two ways the government can impact the economy. By impacting the effective cost of money, the Bangladesh Bank as a controller of monetary policy can affect the amount of money that is spent by consumers and businesses. Monetary policy...