Bangladesh Bank (BB) Governor Fazle Kabir said the central bank has been able to contribute to maintaining sustainable growth of the national economy as well as moderate inflation through its pragmatic monetary policy. “The BB watches both broad money growth and interest rates as intermediate targets and its monetary policy is formulated for ensuring sustainable growth and moderate inflation consistent with Samuelson’s prescription,” he said.
Fazle Kabir made this remark while speaking as the chief guest at the 2nd ‘A K N Ahmed Memorial Lecture on Central Banking’ organised by Bangladesh Institute of Bank Management (BIBM) on its premises in Dhaka Tuesday evening.Late A.K. N Ahmed was the 2nd Governor of the Bangladesh Bank and served the BB as from November 1974 to July 1976.
“Monetary policy has emerged as an important tool of economic policy in both developed and developing countries although the challenges for monetary policy are being changed continuously,” Kabir added.He hopped that the Memorial Lecture will motivate young bankers to learn about central banking and patriotism and will help them move towards more professionalism in the future.
In his keynote speech, Mirza Azizul Islam, former advisor of the caretaker government said the central bank can exercise control partially over broad money and its impact on interest rate.“Elements of net foreign asset like net inflows through exports, imports, remittances and foreign capital cannot be effectively controlled by the Bangladesh Bank,” he stated.
Bangladesh Bank cannot exercise control over government borrowing though it can advise. Possibly more or less it is true for all central banks particularly in the countries like Bangladesh, he said.“Since acceleration of GDP growth remains overriding the development objective of Bangladesh, tightened policy stance is out of question,” he also said.
Higher money supply growth compared to the preceding year accompanied by higher interest rate indicates that the transmission channel is not working well, he added.BIBM Director General and Executive Director of the Bangladesh Bank Md. Nazimuddin, senior bankers, academicians and media representatives were also present on the occasion.
