Social stability will be shattered if the price-hike of food continues, said the Metropolitan Chamber of Commerce and Industry. The impact of the soaring prices of food on the poorer section of the people is very significant and may turn out to be devastating, said the president of the MCCI, Latifur Rahman, at a meeting with the Bangladesh Bank's governor, Salehuddin Ahmed, on Wednesday. Market imperfections, domestic supply shortfalls and imported inflation are the three main reasons behind the rising inflation, he pointed out. The noted businessman was of the view that profitability rather than subsistence should be the motivational factor for farmers to increase production. Prices of food items should not be kept low as farm inputs have become expensive and it may hinder the poverty reduction goal, he cautioned. A revision of strategies for food production and poverty alleviation, coupled with sufficient and sustainable stock of food, will ultimately benefit the society, he said. Latifur Rahman said that certain government measures have created apprehension in the middlemen in the supply chain, which has created more problems in containing the price level. He said the government can monitor the market but the primary focus should be on facilitating smooth operation of the market. Referring to the lending rate, he urged the Bangladesh Bank to develop an inter-bank interest rate like London Inter-Bank Offer Rate (LIBOR) which can work as a benchmark. The MCCI suggested that the banks should increase their capital base and the banking sector should be consolidated. The Bangladesh Bank's governor responded positively to the demand for a benchmark and said the banking sector, at present, does not have such thing like the LIBOR and bankers negotiate for bilateral pricing. The benchmark will help the business sector to get an idea of what the lending rate should be, he admitted. The governor said the private sector banks have agreed to reduce the lending rate and service charge to benefit the private sector. He said the banks need to increase their capital base to Tk 200 crore by 2009.