Practical measures are badly needed to contain the current inflation in the country, economists said at a dialogue on Sunday.
They also discussed new areas in the monetary policy statement (MPS) for the second half of 2023 and comparison of the inflationary situation and challenges of monetary policies and the new tool on interest rate corridor (IRC).
Business Initiative Leading Development (BUILD) organised the dialogue on monetary policy statement and containing inflationary pressure in Bangladesh, said a press release.
BUILD CEO Ferdaus Ara Begum in her keynote speech highlighted the challenges of MPS and IRC and focused on ways for addressing inflation through different tools of the central bank.
She said inflation is linked to many factors, including the state of the economy, level of inflation expectations, credibility, and independence of the central bank and confidence of businesses in the business-enabling ecosystem.
Mohammad Nurul Amin, former MD of NCC Bank in his keynote paper, said that the formulation of a policy on IRC as a monetary tool is a paradigm shift.
The reference interest rate for bank deposit and lending rates named short-term moving average rate (SMART) is a transition from monetary targeting framework to an interest rate targeting framework, he said.
Prof Dr Mahmood Osman Imam of Department of Finance at Dhaka University said that IRC will be used as a tool for the banking sector and not for others, while SMART rate will work as a reference rate for determining interest rates.
Speaking as the chief guest, Dr Md Ezazul Islam, Executive Director (Research), Monetary Policy Department, Bangladesh Bank, said that MPS also needs to be communicated.
He said that the primary goal of MPS is to maintain price stability and for this MPS passes through a very important framework. This framework has gone through several changes over the years.
He added that after the global financial crises, monetary policy statement has been facing several transitions. In this transition mechanism, there are different channels, these are interest rate channel, credit rate channel, bank lending channel and exchange rate channel.
The Monetary Policy Committee of Bangladesh Bank continuously reviews the policies so that it can keep balance with several factors. He emphasised financial literacy so that people can understand the central point of MPS.
Chairing the dialogue Metropolitan Chamber of Commerce and Industry (MCCI) President Md Saiful Islam said the public sector’s growth is higher than the private sector’s growth which is critical to the country’s infrastructure.
The private sector cannot invest more if there is no infrastructure so both public and private sector growth is interlinked. The government could have filtered some projects that would save us and reduce the external pressures, he further added.
Dr Md Mafizur Rahman, managing director of SME Foundation, Dr Jamaluddin Ahmed, former general secretary of the Bangladesh Economic Association, Mohammad Refayet Ullah Mirdha, president of Economic Reporters Forum, Dr Lila Rashid, former executive director of Bangladesh Bank, Manzur Ahmed, adviser to FBCCI, Shawkat Hossain, former managing director of BD Venture and Mr Abdula Hai, manager of Nestle Bangladesh Bangladesh delivered speeches during the occasion.
