Bangladesh Bank (BB) on Wednesday unveiled its first-ever quarterly Monetary Policy Statement (MPS) for October–December quarter of FY 2026–27, keeping the benchmark policy interest rate unchanged at 9.50 % to curb inflation, while acknowledging that elevated borrowing costs continue to suppress private sector credit growth.
The central bank transitioned to a quarterly monetary policy framework from the previous half-yearly cycle in line with condition set by the International Monetary Fund (IMF).
Deputy Governor Dr. Md. Habibur Rahman formally announced the monetary policy at a press briefing held at the Jahangir Alam Conference Hall of the central bank's headquarters in Motijheel.
Under the policy decision, the Standing Lending Facility (SLF) rate remains unchanged at 11%, while the Standing Deposit Facility (SDF) rate stands at 7.50 %.
Highlighting the state of credit flow, the central bank noted that higher financing costs resulting from the tight monetary stance, alongside energy shortages, infrastructure bottlenecks, and investment uncertainty, have severely constrained credit expansion.
Private sector credit growth slowed to a sluggish 4.75 percent in August 2026, reflecting weak investment demand, elevated borrower risks, and structural vulnerabilities in the banking sector, where the non-performing loan (NPL) ratio reached 32.78 percent in June 2026.
The Deputy Governor expressed optimism that private sector credit growth would pick up during the October–December quarter as liquidity conditions adjust.
Explaining the rationale behind keeping the rate unchanged, the central bank stated that premature monetary easing could reignite inflation expectations.
Although headline inflation eased to a 10-month low of 8.26 percent in August 2026—driven by food inflation slowing to 7.02 percent—non-food inflation remained elevated at 9.32 percent.
Underlying price risks linger due to global energy price volatility, potential supply disruptions in the Strait of Hormuz, recent domestic fuel price hikes, and fiscal pressures from the national pay scale implementation.
On overall economic performance, BB cited that real GDP growth for FY26 stood at an estimated 4.14 percent, though Q3 FY26 growth fell to 2.2 percent alongside a 0.28 percent contraction in industrial output.
For FY27, the World Bank projects GDP growth at 4.6 percent, while the IMF has revised its projection down to 3.5 percent from 4.3 percent.
To support growth without undermining price stability, the central bank highlighted a Tk 60,000 crore stimulus package, which includes Tk 20,000 crore for reopening closed factories, alongside active refinance schemes for CMSMEs, agriculture, and export diversification.
Regarding the external sector, BB reported that robust remittance inflows—growing by 18.90 percent in early FY27—and a broadly stable exchange rate continue to bolster foreign exchange reserves and help buffer against imported inflation.
