Bangladesh Bank cut its policy rate by 50 basis points on Thursday, prioritising weak investment, slowing private sector credit growth and subdued economic activity over lingering domestic and global inflation risks.
The central bank lowered the policy rate to 9.50 per cent from 10 per cent, saying the decision was based on a review of investment, private sector lending, employment and economic growth trends.
The new rate will take effect from 2 August.
The Monetary Policy Committee (MPC) approved the move at its 13th meeting, the first meeting of the committee in the 2026-27 fiscal year. The meeting was chaired by Bangladesh Bank Governor Md Mostakur Rahman at the central bank’s boardroom.
Alongside the policy rate cut, the upper band of the interest rate corridor—the Standing Lending Facility (SLF)—was reduced by 50 basis points to 11 per cent from 11.50 per cent. The lower band, the Standing Deposit Facility (SDF), was kept unchanged at 7.50 per cent.
The decision marks a cautious shift in Bangladesh Bank’s monetary stance after a prolonged period of tight policy aimed at containing inflation. With credit demand and investment losing momentum, the central bank moved to reduce borrowing costs even as inflation pressures remain a concern.
At the meeting, MPC members reviewed domestic and global inflation trends, private sector credit flows, investment conditions, employment, economic growth and the country’s balance of payments situation before deciding on the policy rate adjustment.
A lower policy rate reduces the cost for banks to borrow short-term funds from the central bank, potentially easing lending rates over time. However, the extent of any reduction in bank loan rates will depend on banks’ liquidity conditions, deposit costs and credit risks.
The move reflects the central bank’s balancing act: supporting economic recovery by making credit cheaper while keeping inflation risks under close watch, analysts said.
