Cautious monetary policy may fail to meet key targets: CPD

The Monetary Policy for the fiscal year 2021-22 appears to be a cautious one considering the chaotic times during the pandemic, said Centre for Policy Dialogue.

The central bank did not take active steps in reducing the prevailing excess liquidity in the banking system but assured that it will not hesitate to act if needed, CPD said through a virtual conference in its official reaction to the recently unveiled monetary policy.

Economist Fahmida Khatun, also the executive director of the think tank, in her keynote presentation said, “It appears that the targets set for private sector credit and economic growth may not be met, considering the rapidly worsening Covid-19 situation in the country.”

“Inflation targets should be practical, based on updated consumption basket,” she added.

Governance of the banking sector will be an important determinant for better recovery of the economy, she opined.

However, she pointed out that reforms in the banking sector remain outside the radar of the central bank.