Bangladesh Bank kept its policy rate at 9.50% for the October-to-December quarter as inflation risks remained elevated. The standing lending facility rate stayed at 11%, while the standing deposit facility rate remained 7.50%. The decision was taken at the Monetary Policy Committee’s meeting on 23 September and announced on 30 September.
The statement marked Bangladesh Bank’s first move to a quarterly monetary-policy cycle from its previous half-yearly schedule. The central bank had reduced the policy rate by 50 basis points to 9.50% from 2 August. It said more frequent statements would allow policy to adjust faster to changing economic conditions.
INFLATION EASED BUT RISKS REMAINED
Headline inflation fell to 8.26% in August from 9.16% in June, its lowest level in ten months, according to the policy briefing. Food inflation declined to 7.02%, but non-food inflation remained at 9.32%. Officials cited volatile global energy and fertiliser prices, possible disruption around the Strait of Hormuz and domestic energy-price adjustments among the continuing risks.
Bangladesh Bank estimated real economic growth at 4.14% for the 2025-26 financial year and said third-quarter growth had slowed to 2.2%. Industrial production contracted by 0.28%, while private-sector credit growth was 4.75% in August. The central bank said high financing costs, energy shortages and infrastructure constraints continued to impede recovery.
WEAK BANKS IMPAIR POLICY TRANSMISSION
The central bank said weaknesses in the banking sector were limiting the transmission of lower policy rates into credit. Non-performing loans reached 32.78% of banking-sector loans in June, while lenders increasingly preferred government securities to riskier private credit. Officials called for bank restructuring, recapitalisation, stronger governance and restored lending discipline.
Deputy Governor Habibur Rahman said he expected private-sector credit growth to pick up during the October-to-December quarter as liquidity conditions adjust. Bangladesh Bank said it would continue to pursue a data-dependent monetary policy, balancing price stability with the need to support sustainable economic activity.