Repo strategy without touching the credit limit, inflation will come down?

More than 80 countries, including Japan and the UK, have followed the Fed in raising interest rates and are on course to do so. However, even in the United States, India and other major economies, inflation has not come to the fore. Rather, it has the effect of having to pay more for weak currency countries; Inflation is rising.

The UK is looking to curb inflation by raising policy interest rates as well as reducing import duties on goods.

‘More waiting was needed’

Bangladesh Bank’s former governor Salehuddin Ahmed feels that steps like increasing the repo rate to control inflation should have been taken further.

He told, “In August, there was a growth of more than 14 percent in the supply of loans to the private sector. If this loan goes to the manufacturing sector, it is good for the economy.

“It will increase employment. People’s income sector will be created. It will be helpful in handling inflationary pressures.”

Highlighting the increase in credit flow as positive, he said, and if the central bank sees that the loans have been taken by large groups or have gone to activities that will not have any immediate effect on the economy. Then it will increase inflation beyond control. He commented that Bangladesh Bank could have taken action in that case.

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