With inflation risks not yet fully gone, and considering the state of economic growth, pressure on the banking sector and global uncertainty, Bangladesh Bank has kept its policy rate unchanged at 9.50 percent for the October-December quarter.
This is the first time the central bank has announced monetary policy on a quarterly basis, moving away from six-monthly statements so that it can adjust more quickly to changing economic conditions.
Deputy Governor Dr Md Habibur Rahman presented Bangladesh Bank’s first quarterly Monetary Policy Statement (MPS) on Wednesday (September 30), with senior officials present. Inflationary pressure and domestic and external risks remain, so the policy rate has been kept at 9.50 percent for October-December, he said. Although inflation has eased recently, there is not yet enough evidence that it has returned durably to price stability, so a cautious stance has been maintained.
The decision was taken at the 14th meeting of the Monetary Policy Committee (MPC) on September 23, the deputy governor said. The standing lending facility (SLF) rate remains at 11 percent and the standing deposit facility (SDF) rate at 7.50 percent. The policy rate was cut by 50 basis points to 9.50 percent from August 2.
Bangladesh Bank is closely watching several risks to the inflation outlook, including volatile international fuel and fertiliser prices, possible disruption to sea trade through the Strait of Hormuz, the effect of recent domestic fuel price rises and likely higher government spending from implementing the national pay scale, he said.
Overall inflation fell from 9.16 percent in June to 8.26 percent in August, a 10-month low, mainly because food inflation eased to 7.02 percent. Non-food inflation, however, remained at 9.32 percent and is still a major concern, he said, as higher fuel prices could raise transport and production costs and add to cost-push inflation across the economy.
Preliminary estimates put real GDP growth at 4.14 percent in fiscal 2025-26, slowing further to 2.2 percent in the third quarter, when industrial output contracted by 0.28 percent. Various high-frequency indicators, including industrial and power output, energy supply and private credit, also point to a slowdown. High borrowing costs, the energy crisis, infrastructure constraints and uncertainty over domestic and foreign demand are still holding back recovery, he said.
Weaknesses in the banking sector remain a major challenge to how effectively policy rate changes pass through to lending rates and credit flows, he said. The default loan ratio rose to 32.78 percent in June, while private sector credit growth was just 4.75 percent in August, showing that earlier rate cuts have not yet had a significant effect. Liquidity and money market rates have improved somewhat, but with credit risk rising, banks are leaning towards relatively safe government securities.
Monetary policy alone is not enough to boost productive investment, he said; structural reform of the banking sector, including restructuring, recapitalisation, stronger governance and lending discipline, is essential for monetary policy to work.
The deputy governor also set out targeted measures to support productive sectors, including a Tk 60,000 crore stimulus package for economic recovery, with Tk 20,000 crore set aside to reopen closed factories, and strengthened refinancing for agriculture, cottage, micro, small and medium enterprises (CMSMEs) and export diversification.
Bangladesh’s overall balance of payments had a surplus of $6.6 billion in fiscal 2025-26, but net outflows in the financial account pushed it into deficit in the first two months of the current year, he said. Remittances, which rose 18.90 percent in the first two months of fiscal 2026-27, continue to provide important support, and together with relative stability in the foreign exchange market have helped strengthen reserves and ease imported inflation.
Bangladesh Bank will conduct monetary policy based on economic data, balancing price stability with support for sustainable economic activity, and will take the necessary steps to maintain macroeconomic and financial stability while closely monitoring domestic and global conditions, the deputy governor said.
The World Bank has forecast Bangladesh’s growth at 4.6 percent in fiscal 2026-27, while the International Monetary Fund has cut its forecast from 4.3 percent to 3.5 percent.
বাংলায় মূল প্রতিবেদন পড়ুন · Read the original Bengali report