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A theory is appropriate as long as it fits into the fact; when a theory doesn't fit in the fact, it's wise to walk with the fact.

Monday, September 5, 2011

Policy Rates increased

Bangladesh Bank raised its key policy rates, repo and reverse repo, once again by 50 basis points to 7.25% and 5.25% points, respectively, as explained, to curb the recent high trend of inflation. However, in my suspicion, the decision is closely related with the target money supply growth as mentioned in the latest Monetary Policy Statement (MPS, July 2011). It's the right decision to keep the money supply growth in tolerable level, however the opportunity cost of that should be measured properly and alternatives policy options are always good to open.

Here is the news link.  

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