Business Initiative Leading Development (BUILD)
today organized a dialogue on ‘Monetary Policy Statement(MPS) and Containing
Inflationary Pressure in Bangladesh’ on at BUILD Conference Room in the city.
The dialogue majorly covered new areas in the MPS for 2nd half of
2023(H1FY24) and Comparison of Inflationary situation and challenges of
monetary policies and the new tool on interest rate corridor (IRC) as
followed by different countries in the world, said a press release.
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.
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
business-enabling ecosystem.
Mr Mohammad Nurul Amin, former MD of NCC Bank presented the keynote paper and
said that establishment of a policy of interest rate corridor as a monetary
tool is a paradigm shift.
In that respect he added that the reference interest rate for Banks deposit
and lending rates naming SMART is a transition from monetary targeting
framework to interest rate targeting framework.
He said 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.
Prof Dr Mahmood Osman Imam, Professor, Department of Finance, Dhaka
University mentioned 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 rate.
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, today’s program is one of the testimonies and
he appreciated the role of BUILD in that respect.
He said that primary goal of MPS is to maintain price stability and for this
MPS passes through a framework which is very important, this framework has
gone through a number of changes over the years.
He added that after the global financial crises monetary policy statement has
been facing a number of transitions.
In this transition mechanism there are different channel, these are interest
rate channel, credit rate channel, bank lending channel and exchange rate
channel, he added.
He said Monetary Policy Committee of Bangladesh Bank continuously review the
policies so that it can keep balance with a number of factors.
He put emphasis on financial literacy so that people can understand the
central point of MPS.
While chairing the dialogue, Md Saiful Islam, President, Metropolitan Chamber
of Commerce and Industry (MCCI) told that public sector growth is higher than
private sector growth which is critical to the country’s infrastructure.
Source: Bangladesh Sangbad Sangstha