Dhaka:Bangladesh Bank has unveiled its first quarterly Monetary Policy Statement (MPS) for the October-December quarter of FY 2026-27, keeping the benchmark policy interest rate steady at 9.5%. This decision aims to control inflation, despite the fact that high borrowing costs are stifling private sector credit growth.
According to United News of Bangladesh, the central bank has shifted from a half-yearly to a quarterly monetary policy framework to align with the conditions set by the International Monetary Fund (IMF). Deputy Governor Dr. Md. Habibur Rahman announced this policy at a press briefing in the Jahangir Alam Conference Hall at the central bank's headquarters in Motijheel.
The policy decision also includes maintaining the Standing Lending Facility (SLF) rate at 11% and the Standing Deposit Facility (SDF) rate at 7.5%. The central bank highlighted that tight monetary conditions, combined with energy shortages, infrastructure challenges, and investment uncertainties, have significantly limited credit expansion.
Private sector credit growth slowed to 4.75% in August 2026, as investment demand weakened amid elevated borrower risks and structural banking sector issues, with the non-performing loan (NPL) ratio reaching 32.78% in June 2026. However, the Deputy Governor expressed optimism for a recovery in private sector credit growth during the quarter as liquidity conditions improve.
The central bank justified maintaining the current rate by suggesting that any premature easing could reignite inflation expectations. While headline inflation dropped to a 10-month low of 8.26% in August 2026, driven by a slowdown in food inflation to 7.02%, non-food inflation remained high at 9.32%.
Several risks to prices were noted, including global energy price volatility, potential supply disruptions in the Strait of Hormuz, recent domestic fuel price hikes, and fiscal pressures from national pay scale implementation.
In terms of economic performance, the central bank stated that real GDP growth for FY26 was an estimated 4.14%, though Q3 FY26 growth was lower at 2.2%, with a 0.28% contraction in industrial output. The World Bank projects a GDP growth of 4.6% for FY27, while the IMF has revised its projection down to 3.5% from 4.3%.
To support economic growth without compromising price stability, the central bank announced a Tk 60,000 crore stimulus package, which includes Tk 20,000 crore for reopening closed factories and active refinance schemes for CMSMEs, agriculture, and export diversification.
On the external front, robust remittance inflows, which grew by 18.90% in early FY27, along with a stable exchange rate, are helping to strengthen foreign exchange reserves and provide a buffer against imported inflation.