Bangladesh Bank maintained a tight monetary stance for the second half of fiscal year 2025-26, keeping the policy rate unchanged at 10%, as the central bank seeks to contain inflation while pushing lenders for increasing private-sector credit.
Governor Ahsan H Mansur unveiled the January–June monetary policy on Monday at a press conference at the central bank’s headquarters in Motijheel, marking the final policy statement under the interim government.
While key interest rates were left unchanged, the central bank cut the Standing Deposit Facility (SDF) rate by 50 basis points to 7.5% from 8%, a move aimed at discouraging banks from parking excess liquidity with the central bank and encouraging lending and inter-bank market activity. The Standing Lending Facility (SLF) rate was maintained at 11.50%.
Keeping money at the central bank is now less profitable, Dr Mansur said, explaining that the SDF reduction is intended to push banks toward private-sector credit and the inter-bank market.
Bangladesh Bank said inflation, although easing in recent months, remains above its 7% target and warned of renewed price pressures stemming from higher spending ahead of national elections and Ramadan, seasonal increases in essential commodity prices, and the possible implementation of a new public-sector salary structure.
“Lowering the policy rate at this moment could put pressure on the Taka and reignite import-driven inflation,” the governor said.
Bangladesh Bank buys another $196.5 million to stabilize forex market
The banking sector has shown signs of recovery in deposits, with growth rising from below 7% in August 2024 to 11% by December 2025. However, officials noted a “flight to quality,” as depositors increasingly favour banks with stronger reputations.
At the same time, non-performing loans surged to 36% as of September 2025. The central bank attributed the jump to the adoption of international standards requiring stricter loan classification and reporting.
Bangladesh’s external position has strengthened, supported by a stabilised foreign-exchange market. Foreign exchange reserves increased to $33.2 billion in December 2025 from $25.6 billion in August 2024.
For the first time in years, the central bank has not sold any dollars from its reserves since August 2024. Instead, it purchased $4.3 billion from the inter-bank market in FY26. Bangladesh Bank also cleared $3.5 billion in overdue payments to foreign lenders, a move it said significantly boosted international confidence in the economy.
The press conference was attended by Deputy Governors Dr Habibur Rahman and Nurun Nahar, along with the head of the Bangladesh Financial Intelligence Unit (BFIU) and other senior executive directors.