Bangladesh Bank’s decision to keep monetary policy tight leaves the capital market outlook mixed, with elevated interest rates likely to delay fresh liquidity even as targeted stimulus, easing treasury yields, exchange rate stability and banking reforms support the medium-term outlook, according to EBL Securities.
The brokerage said the central bank’s decision to keep the policy rate unchanged at 10 per cent reinforces its focus on containing inflation and anchoring long-term inflation expectations while ensuring credit flows to productive sectors.
A Tk60,000 crore stimulus package for core industries, agriculture and cottage, micro, small and medium enterprises (CMSMEs) signals a gradual shift towards supporting economic recovery, it said. Eligible distressed listed companies could benefit from the concessional financing.
High interest rates and subdued private-sector credit growth are expected to continue weighing on highly leveraged listed companies by delaying expansion plans and keeping financing costs elevated.
Companies with large cash balances are likely to continue benefiting from relatively high interest income despite a modest decline in deposit rates.
The brokerage said declining treasury yields could gradually improve the relative appeal of equities over the medium term as inflation eases and investor confidence strengthens.
Even so, government securities and bank deposits are expected to remain attractive while interest rates stay elevated, limiting additional liquidity flowing into the stock market.
A stable exchange rate should reduce foreign exchange losses for import-dependent companies while helping exporters maintain pricing competitiveness and earnings resilience.
Exchange rate stability could also help restore foreign investor confidence given attractive market valuations, although geopolitical, macroeconomic and financial sector risks are expected to keep overseas investors cautious.
The 4 percentage-point interest rate corridor is expected to moderate earnings growth of banks and non-bank financial institutions by constraining net interest income.
Beyond the market outlook, EBL Securities said Bangladesh Bank continues to balance inflation control with economic recovery through targeted credit support and financial sector reforms.
The central bank projects GDP growth of 6.1 per cent in FY27 against the government’s target of 6.5 per cent.
While aiming to contain inflation at the government’s 7.5 per cent target, its own models forecast headline inflation at 8.9 per cent in the first half of FY27 and 8.6 per cent in the second half.
Private-sector credit growth is projected to recover to 6.8 per cent by December and 8 per cent by June 2027 from an estimated 5.5 per cent in June this year.
EBL Securities said weak business confidence, elevated non-performing loans and banks’ preference for government securities could continue to constrain credit growth.
Public-sector credit growth is expected to slow to 21.8 per cent in the first half of FY27 and 17.2 per cent in the second half from an estimated 25.9 per cent in June 2026, easing crowding-out risks for private borrowers.
The brokerage noted, however, that achieving the target could be challenging as the government plans to borrow Tk1.12 lakh crore from the banking system in FY27.
Broad money growth is projected to rise to 11.5 per cent in the first half of FY27 and 13 per cent in the second half from an estimated 10.8 per cent in June 2026, reflecting Bangladesh Bank’s effort to support growth without reigniting inflationary pressures.
EBL Securities said Bangladesh Bank is also pursuing wide-ranging banking reforms, including stronger risk-based supervision, bank-specific asset quality reviews, earlier recognition of potential loan losses under the Expected Credit Loss framework, enhanced bank resolution measures and stronger asset recovery mechanisms.
The central bank is also replacing proprietary merchant QR codes with the interoperable Bangla QR standard and plans to roll out an Instant Interoperable Payment System by June 2027.
The brokerage said balancing inflation control with economic recovery and financial sector reforms will remain challenging as structural bottlenecks and external uncertainties continue to weigh on the economy.
It added that the effectiveness of the stimulus package and reform agenda will depend on implementation, institutional capacity and sustained policy continuity.
