BB to announce monetary policy today, policy rate set to stay at 10%
Businesses have been pressuring the central bank to reduce the policy rate, arguing that high interest rates have made borrowing costly and constrained business operations
Bangladesh Bank is set to announce its latest monetary policy today, with the policy repo rate expected to remain unchanged at 10% as inflation continues to stay well above the central bank's target.
The policy will be unveiled at 11am by Bangladesh Bank Governor Ahsan H Mansur and will cover the six-month period from January to June.
This will be the interim government's third monetary policy announcement, and officials indicate that the central bank will continue with a contractionary stance to rein in persistent inflationary pressures.
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Inflation rose for the third consecutive month in January, reaching its highest level in eight months. According to data released by the Bangladesh Bureau of Statistics yesterday, the overall inflation rate climbed to 8.58% in January, up from 8.49% in December, 8.29% in November and 8.17% in September.
The policy repo rate – the rate at which Bangladesh Bank lends to commercial banks – is expected to be kept unchanged as inflation has yet to fall to the targeted 6.5% set for FY26 under the previous monetary policy.
A senior Bangladesh Bank official said the primary objective of the central bank remains controlling inflation, which is why the upcoming monetary policy will continue to be contractionary.
Another senior official told The Business Standard that businesses have been pressuring the central bank to reduce the policy rate, arguing that high interest rates have made borrowing costly and constrained business operations.
"However, inflation remains elevated. Under the current circumstances, there is no plan to change the policy rate," the official said, adding that a rate cut could be considered in the next policy cycle if inflation shows a sustained decline.
Officials also said maintaining stability in the exchange rate will be a key focus going forward, as volatility in the dollar rate tends to push up import costs and domestic prices.
The Bangladesh Bank announces its monetary policy every six months.
After the interim government took office in August 2024, the central bank adopted a fully contractionary monetary policy and has maintained it since.
Meanwhile, credit growth in the private sector remains subdued. The target for private sector credit growth was set at 7.20% for December 2025, but actual growth stood at 6.10% at the end of December – its lowest level in two decades.
Bankers say weak investment sentiment following political changes has led businesses to scale back borrowing from banks, contributing to the slowdown in credit growth.
