Is monetary policy
FROM PAGE B1
Mujeri cited the example of Sri Lanka and India for the proper management of inflation.
Sri Lanka was facing the worst economic crisis in its history just a year ago and inflation rocketed to 69.8 percent in September.
In July, inflation in the Island nation stood at 6.3 percent, also way lower than 12 percent in June.
Inflation eased in India as well.
Selim Raihan, executive director of the South Asian Network on Economic Modeling, said the government has yet to take effective measures to control higher inflation.
“Several countries succeeded in reining inflation by hiking the interest rate, but we have not employed our monetary tools to take the right steps.”
Market factors also responsible
Fahmida said a faulty market management was another reason for the skyrocketing inflation.
“There are some sections that are creating an artificial shortage of products.”
The noted economist said the argument that Bangladesh’s inflation is import-based is not fully correct.
Inflation was supposed to decline in Bangladesh since the price of commodities has come down in the international market in recent months.
“Instead, inflation shows no sign of slowing down,” she said.
On Sunday, Rizwanul Islam, a former special adviser of the International Labour Office in Geneva, said market imperfections and foul play in a monopolistic/oligopolistic market have long been pointed out as a major factor behind the recent inflation.
“It’s a pity that very little is being done to moderate this monstrous shock.”
He thinks given the nature of the current inflation, conventional instruments like monetary policy alone can’t fight it.
“Other measures, especially to ease and regulate the supply of essentials, are urgently needed.”
In June, the central bank blamed several factors for the elevated domestic commodity prices and inflation. They include higher prices of imported items in the global market, a larger depreciation of the taka, and the upward adjustments in fuel and energy prices.
The taka has lost its value by about 27 percent against the American greenback since the outbreak of the war in February last year.
A lack of a competitive environment, along with market syndication, could have also contributed to the current CPI (Consumer Price Index) inflation, the BB said.
Yesterday, BB Chief Economist Md Habibur Rahman said the central bank has taken a series of measures, including the withdrawal of the interest rate cap, and the hike in the policy rate, in order to tame inflation.
“It will take time to tame higher inflation.”