Ahsan H Mansoor, executive director of the Policy Research Institute (PRI), recommended immediate and short-term steps to restore stability in inflation and the broader economy.
“Inflation should be brought down through further increases in interest rates. Once interest rates rise, this will restore stability in the dollar exchange rate and resolve the liquidity crisis in banks. Money from outside will come back to the banks. Besides, it needs to regain the confidence of depositors. Whatever is going on in Shariah-based banks must be stopped,” he said.
Former state planning minister Shamsul Alam described the target of bringing inflation to 7.5 percent by June as ambitious and expressed doubt on its achievement.
“The current inflation initially came into the country with imports. Later, inflation increased due to reasons related to increase in production costs. Once production costs increase, it cannot be reduced overnight. Therefore, inflation cannot be controlled by interest rates alone.” Apart from higher interest rates, he suggested measures to increase commodity supply and reduce production costs.