IT has become imperative for the interim government to start giving high priority to inflation management. But the policies to be operated in this respect should leave ample room for meeting the genuine needs of finance for entrepreneurial activities. The squeeze should come in the areas of unproductive activities. The same will then prevent huge sums of money from coming into circulation that would otherwise not aid productive activities.
Limiting money supply in a bid to contain inflation can turn out to be as undesirable as inflation itself. With credit squeeze as the most used weapon to reduce money supply, the credit needs of businesses may suffer and lead to economic stagnation. The Bangladesh Bank will have to weigh and apply policies exceptionally carefully. The central bank should play the role of a balancer between the needs of the economy or the private sector and the unproductive spending for meeting both ends without allowing inflation to take wings.
Amin Ahmed Chowdhury
Malibag, Chowdhrypara
Dhaka
Inflation must not take wings
FE Team | Published: June 16, 2007 00:00:00 | Updated: February 01, 2018 00:00:00
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