The Business Initiative Leading Development (BUILD) organised a dialogue on “Interest Rate Corridor to Contain Inflationary Pressure in Bangladesh” at the BUILD conference room on Sunday.
The dialogue majorly covered new areas in the Monetary Policy Statement (MPS) for the second half of 2023 (H1 FY24) and a comparison of the inflationary situation and challenges of monetary policies and the new tool on interest rate corridor (IRC) as followed by different countries in the world.
BUILD CEO Ferdaus Ara Begum delivered a keynote highlighting the challenges of MPS and interest rate corridor and focused on ways for addressing inflation through different tools of the central bank, read a press release.
She further said that inflation is linked to many factors such as the state of the economy, the level of inflation expectations, the credibility and independence of the central bank and the confidence of businesses over the business-enabling ecosystem.
Mohammad Nurul Amin, former managing director of NCC Bank, presented the keynote paper and said that the establishment of a policy of interest rate corridor as a monetary tool is a paradigm shift.
He said that the reference interest rate for bank deposit and lending rates naming SMART is a transition from monetary targeting framework to interest rate targeting framework.
Nurul Amin added that to contain inflation, MPS is contractionary as announced accompanied by specific policy initiatives, but fiscal measures are expansionary.
He raised the point whether “we will go for market driven treasure rate or we will follow the donors prescription to follow IRC.”
