The Monetary Policy Committee has decided to continue its tight monetary policy stance for the first half of 2026, leaving businesses worried that high borrowing costs will further hurt operations and investment.
“Since inflation did not come down to the expected level, the policy rate will remain unchanged at 10 per cent,” Bangladesh Bank Executive Director and spokesperson Arief Hossain Khan told TIMES of Bangladesh after the committee’s meeting on Thursday evening.
Inflation, which showed early signs of easing by falling to nearly 8 per cent at the beginning of the current fiscal year, later turned volatile, largely due to higher rice prices. In December, inflation rose to 8.49 per cent.
At the same time, private sector credit growth has been hovering below 7 per cent for several months.
This has raised concerns over erosion of purchasing power, as investment and wage growth have lagged behind real inflation for a prolonged period.
“Inflation became the single most important factor, hurting everything in the economy—from consumers to businesses,” said Humayun Rashid, former president of the International Business Forum of Bangladesh.
He blamed the government for failing to tame inflation, saying policy shortcomings had worsened the situation for businesses.
When import bills surged due to currency devaluation, repeated requests from the business community for duty cuts were barely entertained, he added.
Despite declines in international prices, rice prices remained high in the domestic market, pushing inflation upwards in what analysts describe as an exceptional case in South Asia.
“Rice has been a big failure of the government in market management and monitoring,” said Rashid, who is also managing director of Energypac Group.
The government’s underperformance is punishing both consumers and businesses, he said, adding that amid a prolonged slowdown, companies urgently need relief from high interest expenses.
“When you struggle with your existing businesses, you will barely think of expansion or hiring, and this is weakening the economy every month,” the entrepreneur added.
The monetary policy is set to be announced next week.
