Bangladesh set an ambitious target of seven percent growth in Gross Domestic Product (GDP) for the fiscal year starting July 2011 after the impoverished nation achieved expansion of 6.7 percent last year, the highest since 1976-77.

But Bangladesh Bank governor Atiar Rahman said the growth would "slightly come down from the previous expectation to between 6.5 and seven percent", as the bank tightens credit to combat inflation

Announcing the bank's monetary policy stand for the next six months to June, he said it would "pursue a restrained monetary policy in order to curb inflationary and external sector pressures".

The nation's headline inflation hit a 20-year high of 11.97 percent in September, but declined to 10.4 percent in December after the central bank raised key policy rates twice since July.

"However the fact that non-food inflation is still steadily increasing -- partly due to energy and petroleum price hikes -- suggests that focus on bringing inflation to single digit levels needs to continue," he said.

Bangladesh's export-dependent economy also faces headwinds in the form of deteriorating shipments and remittances due to cooling demand from Europe, slowing exports and weaker aid flows.

The country's exports including from the vital garment sector grew 15 percent in the second quarter to December, down from growth of 30 percent in the first quarter.