Bangladesh Bank (BB) has kept its benchmark policy rate unchanged at 10 per cent for the first half of fiscal year 2026-27, signalling it will maintain a tight monetary stance despite slower private-sector credit growth as it continues to prioritise inflation control.
The central bank also left the Standing Lending Facility (SLF) rate unchanged at 11.5 per cent and the Standing Deposit Facility (SDF) rate at 7.5 per cent under its Monetary Policy Statement for July-December 2026.
BB said it would continue its contractionary monetary policy to rein in headline inflation and anchor inflation expectations. Inflation eased to 9.4 per cent in May from a peak of 11.7 per cent in July 2024, but it remains above the government’s FY27 target of 7.5 per cent.
The central bank said the policy aligns with the government’s macroeconomic objectives of achieving 6.5 per cent GDP growth and 7.5 per cent inflation. It acknowledged that bringing inflation down has come at the cost of slower economic activity.
BB said private-sector credit growth slowed to 5 per cent by the end of May as banks became more cautious amid rising non-performing loans and increased government borrowing. Excess liquidity also shifted into low-risk government securities instead of business lending.
Despite these pressures, the central bank said keeping the policy rate unchanged remains appropriate because inflation continues to pose the country’s biggest macroeconomic challenge. It added that monetary tightening alone cannot fully address inflation driven by structural bottlenecks and supply-side constraints, but it remains essential to keep inflation expectations under control.
BB also reaffirmed its commitment to a flexible, market-based exchange rate to strengthen external resilience, support exports and maximise remittance inflows.
Alongside the policy announcement, the central bank unveiled a Tk60,000 crore targeted stimulus package for industry, agriculture and cottage, micro, small and medium enterprises (CMSMEs). It said Tk41,000 crore would come from surplus banking-sector liquidity, while Tk19,000 crore would be provided from its own resources, limiting the package’s inflationary impact while supporting production, investment and employment.
The central bank warned that the economy remains vulnerable to elevated inflation, weak investment, uncertainty over energy supplies, rising non-performing loans and geopolitical tensions, particularly in the Middle East, which could disrupt oil and fertiliser supplies and intensify cost-push inflation.
BB said it expects economic growth to recover gradually during FY27, supported by the national budget and targeted credit support, while maintaining price stability as its primary policy objective.
