Cenbank keeps policy rate unchanged amid economic pressures, inflation concerns

The Bangladesh Bank has decided to keep the policy rate unchanged after reviewing the current economic situation, inflation, and external sector conditions.

The central bank warned that consumer demand is likely to rise ahead of the upcoming national election and during Ramadan, which could temporarily push inflation upward.

The decision was taken unanimously at the Monetary Policy Committee's (MPC) first-quarter review meeting for the 2025-26 fiscal year, held earlier this month. The minutes of the meeting were published on the central bank's website yesterday.

The meeting, chaired by Governor Dr Ahsan H Mansur, was attended by MPC members including Deputy Governor Dr Md Habibur Rahman, Chief Economist Dr Mohammad Akhtar Hossain, BIDS Director General Dr AK Enamul Haque, Dhaka University Economics Department chair Prof Masuda Yasmeen, and Bangladesh Bank Executive Director Dr Md Ejazul Islam.

The committee discussed the country's macroeconomic situation, both from domestic and international perspectives, focusing particularly on inflation, liquidity conditions in the banking sector ahead of Ramadan and the national election, the status of the policy interest rate, external sector pressures, and developments in the exchange rate.

The members also reviewed the country's economic growth, market interest rates, foreign exchange conditions, and the impact of monetary policy.

Although inflation has been easing gradually, with overall inflation falling to 8.36% in September 2025, the MPC noted that food prices may rise in some regions due to supply disruptions.

According to meeting sources, interbank call money and repo rates have fallen slightly, while increased investment in government securities has provided some relief to interest rate pressures.

However, private sector credit growth remains weak, which the committee attributed to reduced loan demand ahead of the national election.

On the external front, export growth was moderate, while imports rose – a trend the MPC said was expected after the relaxation of LC margins for essential Ramadan-related imports. Remittance inflows also remained steady during the period.

The MPC, however, identified several risks that could put upward pressure on inflation – crop damage to Aman paddy due to weather conditions, the national election, the Ramadan period, and the possible announcement of a new public-sector pay structure.

Taking all factors into account, the committee decided to keep the policy rate unchanged at 10%. The SDF (Standing Deposit Facility) rate will remain at 8%, and the SLF (Standing Lending Facility) rate at 11.5%.

The central bank said it would continue its tight monetary stance until the real policy rate reaches 3%, with the aim of stabilising the macroeconomy and bringing inflation down further.