Bangladesh Bank has chosen to keep the policy rate unchanged at 10%, despite persistent economic headwinds, inflationary risks, and pressures on the external sector. The central bank announced its decision after a comprehensive assessment of current macroeconomic conditions at the Monetary Policy Committee’s (MPC) first-quarter review meeting for the 2025–26 fiscal year, held earlier this month. The meeting minutes were released on Tuesday.
The MPC warned that consumer demand is expected to rise ahead of the upcoming national election and during the holy month of Ramadan—two events that traditionally amplify domestic spending. This seasonal and event-driven increase in consumption could temporarily push inflation upward, even though overall inflation has been easing in recent months. As of September 2025, the national inflation rate stood at 8.36%, continuing a gradual downward trend.
The meeting was chaired by Bangladesh Bank Governor Dr Ahsan H Mansur and attended by senior policymakers including Deputy Governor Dr Md Habibur Rahman, Chief Economist Dr Mohammad Akhtar Hossain, BIDS Director General Dr AK Enamul Haque, Dhaka University Economics Department Chair Professor Masuda Yasmeen, and Executive Director Dr Md Ejazul Islam.
During the session, the committee reviewed a wide range of issues shaping the economy. Key topics included inflation dynamics, liquidity conditions in the banking sector in the weeks leading up to Ramadan and the election, private-sector credit behaviour, global economic trends, the outlook for the exchange rate, and the overall impact of current monetary measures.
Although the central bank noted some positive developments—such as slightly lower interbank call money and repo rates, and increased investment in government securities—concerns remain. The MPC observed that private-sector credit growth remains subdued, a trend attributed largely to reduced appetite for new loans as businesses adopt a wait-and-see approach ahead of the election.
On the external front, export performance was stable but not robust, while imports grew at a moderate pace. According to the MPC, the rise in imports was anticipated, driven by relaxed LC margin requirements to facilitate essential Ramadan-related goods. Remittance inflows held steady, providing a degree of support to the balance of payments, although not sufficient to significantly ease current pressures.
The committee also identified several risks that could fuel fresh inflationary pressure. These include potential weather-related damage to Aman paddy crops, heightened pre-election activity, Ramadan-related demand surges, and the possibility of a revised public-sector pay structure, which could increase disposable income and spur additional consumption.
After weighing all factors, the MPC decided to maintain the policy rate at 10%, along with the Standing Deposit Facility (SDF) rate at 8% and the Standing Lending Facility (SLF) rate at 11.5%. The central bank reaffirmed its commitment to maintaining a tight monetary policy stance until the real policy rate reaches 3%, a threshold it considers necessary for restoring macroeconomic stability and further reducing inflation.