The Bangladesh Bank in its new monetary policy statement said that the country will continue to face significant macroeconomic challenges in the first half of fiscal year 2025–26 due to persistent domestic vulnerabilities and growing external risks.
BB unveiled monetary policy statement for the July-December period of FY26 at a press conference attended by the central bank governor on Thursday.
In its MPS, the central bank outlined a cautious outlook, citing inflationary pressure, political uncertainty surrounding the upcoming national election, sluggish GDP growth, stagnant private investment, and a persistently high level of non-performing loans (NPLs) in the banking sector.
Despite maintaining a tight monetary policy to control inflation and stabilise the exchange rate, Bangladesh Bank admitted that key macroeconomic indicators remain under stress.
Private investment is yet to recover, reflecting weak business confidence and structural bottlenecks. Meanwhile, elevated NPLs continue to limit banks’ lending capacity and discourage new investments.
On the external front, the central bank noted that export growth — critical for foreign exchange earnings — may face setbacks in the near term due to tariff shocks in key markets.
‘The central bank will continue its tight monetary policy stance in H1 FY26 to contain inflation and anchor inflation expectations,’ the MPS stated.
‘If the inflation rate falls below 7 per cent, the policy repo rate may be adjusted downward. Until then, it will remain unchanged at 10 per cent,’ it said.
Bangladesh Bank reaffirmed its commitment to achieving a 6.5 per cent inflation target by June 2026, though it acknowledged ongoing pressures from global commodity price volatility, exchange rate misalignment, and rising import costs.
Governor Ahsan H Mansur said inflation is gradually declining, but is yet to reach the desired level.
‘Our target is to bring it down to between 3 and 5 per cent,’ he said. Inflation dropped to 8.48 per cent in June, supported by stable exchange rates and strong production. Except for rice, prices of most essentials have remained stable,’ he added.
Commenting on growth prospects, the governor said, ‘Given the current realities, 4 per cent growth is not bad. Political stability is a key factor in achieving higher growth.’
He also assured depositors that their savings are safe, saying, ‘There is no reason for concern. This time, there will be large-scale operations in around 20 banks. The government will inject significant funds, which it can recover with profit.’
