Bangladesh Bank has unveiled a further tightened monetary policy for the first half (H1) of the current fiscal year 2025-26, signalling a continued strong focus on curbing inflation and ensuring macroeconomic stability.

The central bank aims to bring inflation below 7 percent while targeting a Gross Domestic Product (GDP) growth rate of 5.5 percent.

Governor Dr Ahsan H Mansur announced the new Monetary Policy Statement (MPS) at a press conference held at the Bangladesh Bank headquarters in Motijheel today (Thursday).

Addressing the media, Governor Mansur said interest rates could see adjustments downwards in this July-December period, contingent on various economic indicators.

He reiterated the central bank's commitment to maintaining a flexible exchange rate regime, emphasising its role in stabilising the exchange rate, building foreign reserves and mitigating external shocks.

To tackle the persistent challenge of rising non-performing loans (NPLs), Bangladesh Bank has launched significant reform initiatives. These measures are designed to avert a potential crisis and ensure long-term economic stability.

The Governor highlighted that the effective implementation of ongoing initiatives, coupled with forthcoming measures and robust resolutions for distressed banks based on Asset Quality Review (AQR) findings, will be crucial in restoring good governance practices and bolstering stakeholder confidence in the banking system.

Bangladesh Bank likely to ease monetary policy amid interest rate shift

In a key development for banking supervision, Bangladesh Bank is set to roll out a Risk-Based Supervision (RBS) system for banks starting from January 2026.

This initiative aims to bring about qualitative changes in how banks are monitored and regulated, moving away from a traditional compliance-based approach.

While acknowledging a recent downward trend in inflation, Governor Mansur cautioned that it remains above the target level.

He mentioned the uncertainty surrounding the persistence of this deceleration, citing ongoing cost pressures from the nominal depreciation of the Taka, triggered by reciprocal tariff measures from the USA.

Bangladesh Bank set to announce a new monetary policy on Thursday

"Therefore, Bangladesh Bank is likely to maintain its tight monetary policy in H1FY26 to contain inflation below 7 percent, while still supporting productive economic activities," stated the monetary policy statement, underscoring the central bank's balanced approach.

Deputy Governors, Executive Directors and other senior officials of Bangladesh Bank were present at the press conference.