Bangladesh Bank Maintains Tight Monetary Policy, Targets Inflation Below 7%

Bangladesh Bank has announced a tightened monetary policy for the first half of fiscal year 2025-26, aiming to bring inflation below 7 percent while targeting a GDP growth rate of 5.5 percent. The central bank will maintain the repo rate at 10 percent from July to December, with a reduced private sector credit growth target of 7.2 percent, down from 9.8 percent, to help control inflation without loosening monetary conditions. Governor Ahsan H Mansur emphasized the continuation of contractionary measures until inflation falls to around 6 percent and highlighted efforts to stabilize the exchange rate, build foreign reserves, and address rising non-performing loans through reforms and a new Risk-Based Supervision system starting in 2026. Despite recent inflation decreases, uncertainty remains due to ongoing cost pressures and global economic challenges. The policy reflects a cautious balancing act between curbing inflation, supporting economic growth, reviving investment, and maintaining financial stability amid persistent domestic and global uncertainties. Officials and economists agree that continuing monetary tightening is necessary given the current economic environment, with no immediate interest rate cuts expected.