New monetary policy keeping interest rates unchanged

Bangladesh Bank has announced the monetary policy for the first six months of the year, following the previous trend, keeping in mind the strategy of controlling inflation. Where there was no change in the policy interest rate. There was a hint that the policy interest rate would not be lowered until inflation decreased to the desired level. In the last month of January, the overall inflation on a point-to-point basis was 8.58 percent. In the previous month, December, it was 8.29 percent.

Economists do not see the possibility of inflation decreasing in January, February and March of this year due to the impact of the national elections. In that context, the central bank is trying to control the increase in inflation over the last three months as much as possible in the next two months.

Announcing the monetary policy for January-June at the central bank on Monday (February 9), Governor Dr. Ahsan H. Mansur said that the monetary policy has been successful in all other indicators except reducing inflation to 7 percent. We do excellent (we have done the best), only inflation has failed to be controlled. He said, we are optimistic that this (inflation) will also come down. The global economic forecast and our economy will do better in the coming days, so inflation will also come down.

Commenting that a target has not been achieved, he said, it would not be right to shoot because a target has not been achieved. Therefore, we will not reduce the policy rate at this time. Optimistic about the reduction in inflation, the Governor said, our reserves are in a good position. We have had reserves as per the IMF conditions since last August. Which has never happened before. Our reserves are increasing.

Commenting that it is possible to keep the exchange rate stable due to keeping the interest rate policy high, he said, if it were not for this, the exchange rate would not have been stable. We are now getting its benefits. The supply of foreign currency, including remittances, is increasing.

The International Monetary Fund (IMF) has advised not to reduce the policy interest rate until inflation falls below 7 percent. The central bank had also announced that decision in the last monetary policy.

In the new monetary policy, the policy interest rate is kept as before, i.e. 10 percent. Maintaining the continuity of the previous decision, the SLF rate was kept at 11.5 percent and the SDF rate was slightly reduced from 8 percent to 7.5 percent.

The credit flow to the private sector is estimated at 8.5 percent. The previous time it was 7.2 percent.

Until last December, the growth was 6.10 percent. The monetary policy contains a possible plan for how much money will be supplied in the market at a particular time of the year. Bangladesh Bank announces monetary policy every six months.

Contractionary monetary policy for more than a year:

Bangladesh Bank has been running a contractionary monetary policy since the end of 2024. In the last announced monetary policy, the policy interest rate was set at 10 percent. The central bank decided to set the SLF rate at 11.5 percent and the SDF at 8 percent.

As the value of the taka began to decline against the dollar, the rising inflation in September 2022 jumped to double digits and reached 9.52 percent. In the previous month, August, it was also 7.56 percent.

To control inflation, the central bank started raising the policy interest rate from the end of 2022. Even then, inflation continued to rise and reached 11.66 percent in July 2024.

The student movement that began that month turned into a movement to overthrow the government the next month. The Awami League government fell on August 5 due to a student-public uprising.

After the interim government took office, the central bank adopted a full-scale contractionary monetary policy. Inflation started to decline in August 2024. Gradually, the inflation rate came down to 8.17 percent in October 2025. But then it increased for three consecutive months to 8.58 percent in January.