Expansionary monetary policy: Not a bad idea

Abstract

In this analytical piece, Prof. Dr. M. Azizur Rahman challenges the conventional reliance on contractionary monetary policy to curb inflation in Bangladesh. He argues that inflation in the local context is primarily driven by market syndicates and "market failures" rather than an excess of money supply alone. The author posits that an expansionary monetary policy—when strategically coordinated with fiscal policy can actually lower prices by stimulating the production and supply of goods and services. By increasing credit flow to productive sectors, the policy aims to foster competition and break the influence of collusive business syndicates. Furthermore, the article emphasizes the need for structural reforms, particularly in the capital market, to shift it away from speculative "gambling practices" and toward long-term industrial investment. Rahman concludes that a production-focused monetary stance is essential for achieving higher GDP growth and creating employment in an economy plagued by infrastructural bottlenecks.