Bangladesh Bank (BB) has announced its monetary policy for the second half of the 2025–26 fiscal year (January–June), maintaining a firm contractionary stance to curb inflation while slightly raising private sector credit growth targets to stimulate investment.
Governor Dr. Ahsan H. Mansur officially unveiled the policy on Monday, marking the third such statement under his leadership and the current interim government. The policy aims to strike a delicate balance between stabilizing the economy and fostering necessary growth.
Key Interest Rates and Policy Shifts
In a move to anchor high prices, the central bank has decided to keep the primary policy rate (repo rate) unchanged at 10%. This follows the last adjustment in October 2024, when the rate was hiked to its current level.
However, the bank introduced a strategic cut to the Standing Deposit Facility (SDF), lowering it from 8% to 7.5%. This rate dictates the interest banks earn by keeping excess funds with the central bank.
“We want banks to move away from parking money at the central bank and instead direct those funds toward active investment,” Governor Mansur explained. “By reducing the SDF, we are encouraging more lending to the real economy.”
The Standing Lending Facility (SLF), which governs interbank borrowing, remains unchanged at 11.50%.
Inflation and Credit Targets
The central bank faces a significant challenge in cooling the economy. While current inflation stands at 8.58%, the new policy sets an ambitious target to bring the average inflation down to 7% by the end of the fiscal year.
To support economic activity during the post-election period, Bangladesh Bank has revised its credit growth projections:
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Private Sector Credit: The growth target has been increased from 8% to 8.5%. This comes after a period of sluggish performance where actual growth reached only 6.1% as of December.
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Public Sector Credit: The target for government borrowing is set at 21.6%. While the previous target was 20.5%, the government’s actual borrowing surged to 28.9% by December, reflecting high fiscal demands.
Summary of Targets (Jan–Jun 2026)
| Indicator | Current Status | Target (June 2026) |
| Inflation | 8.58% | 7.0% |
| Policy Rate (Repo) | 10.0% | 10.0% (Unchanged) |
| SDF Rate | 8.0% | 7.5% (Reduced) |
| Private Credit Growth | 6.1% | 8.5% |
| Public Credit Growth | 28.9% | 21.6% |
The Governor emphasized that while the policy remains tight to prevent price spirals, the slight expansion in private credit limits is a signal to investors that the central bank is ready to support a recovery in industrial and commercial sectors.
