The Dhaka Chamber of Commerce and Industry (DCCI) has expressed concern over Bangladesh Bank’s decision to maintain a contractionary monetary policy for the second half of FY 2024-25, with the policy rate set at 10 percent.

Although this policy aimed to curb inflation, such a rigid stance is detrimental to private sector credit growth and economic expansion, it said. The private sector, which relies heavily on banks for investment, has been particularly impacted as high interest rates increased production costs, thereby fuelling inflation, according to a DCCI press release on Monday.

While inflation eased to 9.94 percent in January 2025 from 10.89 percent in December 2024, it remained above the desired target, it said.

Furthermore, DCCI raised concerns over the decision to maintain the private sector credit growth target at 9.8 percent for January to June, particularly as the actual growth rate fell to 7.3 percent in the first half of the fiscal year, the lowest in 12 years.

Meanwhile, public sector credit growth surged from the 14.2 percent target to 18.1 percent in December 2024.

DCCI urged Bangladesh Bank to introduce sector-specific funds and entrepreneurial support programs to boost credit flow, as restrictive monetary policies could have further stagnated the economy.

Although the central bank had implemented a market-based exchange rate, traders (both exporters and importers) were still required to purchase US dollars at higher prices with varying rates. This discrepancy needed to be addressed to ensure consistency and benefit all stakeholders, including traders and remitters.

DCCI also criticised Bangladesh Bank for failing to take sufficient steps to strengthen banking governance amid the liquidity crisis and rising non-performing loans (NPLs). While the adoption of the Expected Credit Loss (ECL) methodology under IFRS 9 was seen as a positive move, there was limited focus on enhancing governance. Without stronger governance and faster legal resolutions, the banking sector remains vulnerable, undermining private sector growth and economic resilience, it said.

DCCI called on Bangladesh Bank to adopt a more flexible and balanced monetary policy, closely monitor its impact on inflation and growth, and implement targeted measures to stimulate private sector credit flow. By fostering a conducive environment for investment and ensuring macroeconomic stability, Bangladesh could have achieved sustainable economic growth and stability in the future.