Bangladesh Bank is set to unveil the first monetary policy for 2026-27 fiscal year, and the second for the current calendar year this Tuesday at 3pm.
The central bank confirmed on Monday that Governor Mostaqur Rahman will officially announce the policy. This marks the first monetary policy declaration during his tenure.
Monetary policy serves as a strategic framework to determine the market’s money supply necessary for the implementation of the government’s financial plans. Bangladesh Bank typically announces these policies at six-month intervals; the upcoming strategy will cover the July-December period.
In February, the central bank had maintained a contractionary stance, keeping policy interest rate at 10 per cent.
Efforts to curb inflation began in late 2022 with incremental hikes to the policy rate. Despite these measures, inflation persisted in double digits, reaching a peak of 11.66 per cent in July 2024.
That same month, student-led demonstrations evolved into a mass uprising, culminating in the fall of the Awami League government on 5 August 2024. Following the takeover by interim government, the implementation of a full-scale contractionary monetary policy saw inflation begin to subside from August 2024.
Since the BNP formed the government this February, initiatives have been launched to boost credit flow to the private sector. The most recent proposed budget includes a special loan package of Tk60,000 crore intended to revive closed factories.
Consequently, the new monetary policy faces the dual challenge of controlling inflation while simultaneously expanding private sector credit.
In response to rising non-performing loans, an internal committee of Bangladesh Bank has recommended fixing a 4 per cent interest rate spread. This measure would cap the difference between deposit and lending rates at a maximum of 4 per cent.
