A right step by the central bank
Monday, 24 September 2007
THE latest decision by the Bangladesh Bank to put on hold the action plan under its mid-year monetary policy statement (MPS) has drawn our attention. The decision will be considered a right step under the prevailing circumstances. It is timely in view of the demands of the situation for addressing the problems facing rehabilitation of the flood-damaged rural economy. If the central bank would have gone for decreasing money stock in accordance with its earlier-announced MPS, that would have aggravated the price situation. Inflation in our situation has largely been because of supply-side constraints and demand-pull factors have had so far not very significant effect on the prices. Hence, a fight monetary policy will hardly serve any useful purpose, if steps are not taken on a priority basis to help augment supplies in the market.
However, the central bank will require to keep a close watch on the developments in areas of investment activities, particularly in the private sector. For that matter, both economic and non-economic factors that continue to impact adversely private investments in the economy should be addressed by a combination of fiscal, monetary and other policies to create confidence among the economic operators.
Saleh Ahmed
Banani, Dhaka.
However, the central bank will require to keep a close watch on the developments in areas of investment activities, particularly in the private sector. For that matter, both economic and non-economic factors that continue to impact adversely private investments in the economy should be addressed by a combination of fiscal, monetary and other policies to create confidence among the economic operators.
Saleh Ahmed
Banani, Dhaka.