Raising interest rates alone may not effectively reduce inflationary pressures, as combating rising prices requires a broader approach, according to economist Rizwanul Islam. Speaking at the launch of his book Development and Globalization: Global and Bangladesh Perspective, Islam emphasized the need for supply-side interventions, supply chain management, and demand-control measures.
While raising interest rates is a global trend, Islam warned that continuous hikes could reduce investment, lower production, and increase unemployment. Instead, he suggested increasing the supply of goods to ease inflation.
Finance Adviser Salehuddin Ahmed acknowledged that the government is addressing inflation not only through interest rate adjustments but also by tackling supply-side challenges. He noted that a political government could better manage market inefficiencies and reduce extortion.
Despite recent economic struggles, Ahmed said conditions have improved, and while GDP growth may slow, there will be no food shortages. The interim government will continue banking, stock market, and revenue sector reforms, paving the way for the next administration.
Islam’s book explores topics such as GDP, globalization, and development strategies. He highlighted the need for Bangladesh to enhance technological capacity, labor productivity, and institutional efficiency to avoid the middle-income trap.
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