Policy rate to be lowered if inflation falls below 8%, Bangladesh Bank tells IMF

The Bangladesh Bank has informed the International Monetary Fund (IMF) that the central bank will consider lowering the policy rate once inflation drops below 8%.

Central bank Governor Ahsan H Mansur conveyed the information to a visiting IMF delegation during a meeting in Dhaka today (6 April), said Spokesperson Arif Hossain Khan.

"In response to the IMF's query, the governor noted that inflation is expected to come down to 8.2% by June, according to projections from both the Bangladesh Bank and the IMF," he added.

The IMF delegation expressed concern over the country's revenue collection performance but acknowledged progress in ongoing reforms initiated by the Bangladesh Bank, the spokesperson said.

Later in the day, the IMF delegation held separate meetings with various departments of the central bank. One of the sessions focused on the liquidity status of domestic banks. 

"The delegation specifically asked about the liquidity situation in 12 banks. The governor responded that, following liquidity support measures, only five banks are currently facing a liquidity crisis, while the others have recovered," Arif said.

"When asked how liquidity support was provided, the governor said it was done through promissory notes — a financial instrument that contains a written promise by one party to pay another a definite sum of money. However, the IMF delegation expressed reservations about this method," he added.

The IMF team also inquired whether banks currently facing liquidity challenges are still issuing loans. 

"The governor clarified that while these banks have ceased issuing regular loans, they are offering limited lending—primarily to SMEs and the agriculture sector—under various refinance schemes facilitated by the central bank," the BB spokesperson said.

Topics such as non-performing loans, foreign reserves, and the exchange rate were not discussed in today's meeting, he added.