Bangladesh Bank keeps policy rate unchanged in new monetary policy

Despite progress on other economic indicators, inflation remains above target, the central bank says

Bangladesh Bank has kept its key policy rate, known as the repo rate, unchanged in its latest monetary policy as part of ongoing efforts to rein in inflation.

Announcing the monetary policy for the January–June period on Monday, the central bank said the policy rate -- the interest rate at which it lends short-term funds to commercial banks -- would remain at 10 percent.

Despite progress on other economic indicators, inflation remains above target, according to the central bank.

Point-to-point inflation stood at 8.58 percent in January, up from 8.29 percent in December. Economists say inflation is unlikely to ease in the coming months due to the impact of the national election and higher demand during Ramadan.

Bangladesh Bank Governor Ahsan H Mansur said the policy had met most of its objectives, except for bringing inflation down to 7 percent.

"We have done extremely well. Only inflation control has fallen short. We remain hopeful that inflation will come down. Global economic forecasts are improving, and our economy is expected to perform better in the days ahead, which should help ease inflation,” he said.

He added that the policy rate would not be cut until inflation eased further.

“It would not be right to lower rates just because one target has not yet been achieved."

According to Mansur, foreign exchange reserves are now in a stronger position and had met conditions set by the International Monetary Fund (IMF) since August.

Keeping interest rates high had helped stabilise the exchange rate, he said, adding that remittances and foreign currency inflows were rising.

Under the new policy, the Standing Lending Facility (SLF) rate has been kept at 11.5 percent, while the Standing Deposit Facility (SDF) rate has been slightly reduced from 8 percent to 7.5 percent.

Bangladesh Bank has projected private sector credit growth of 8.5 percent, up from a previous estimate of 7.2 percent. As of December, credit growth stood at 6.1 percent.

The IMF has advised Bangladesh not to reduce interest rates until inflation falls below 7 percent, a position the central bank reiterated.

The central bank announces its monetary policy every six months.

Bangladesh Bank has been pursuing a contractionary monetary policy since late 2024, after inflation surged following the depreciation of the taka in 2022.

Inflation peaked at 11.66 percent in July 2024 before easing under tighter monetary conditions after the interim government took office in August. However, after falling to 8.17 percent in October 2025, inflation has risen for three consecutive months, reaching 8.58 percent in January.