Bangladesh Bank (BB) will intervene in the foreign exchange market to curb volatility in the exchange rate and rebuild the country's foreign exchange reserves.

Bangladesh Bank (BB) has lowered the target for private sector credit growth in its latest monetary policy, citing a lack of appetite arising from political uncertainties.

Bangladesh Bank has held its key policy repo rate steady at 10 percent for the first half of the current fiscal year, reaffirming its commitment to a tight monetary stance aimed at curbing persistent inflation, weak private investment, and growing uncertainty over global trade.

The central bank should adopt a more supportive stance, the chamber says

The banking regulator unveils monetary policy statement for July-December 2025

BB said the 10 percent policy rate would remain in place for the July-December period

A high-powered panel of the Bangladesh Bank (BB) decided to maintain the policy rate at 10 percent until the inflation comes down to a desired level and also spoke about moving away from the crawling peg and letting market forces determine the US dollar exchange rate.

Bangladesh Bank Governor Ahsan H Mansur said tightening monetary policy is the only globally practised remedy to heal inflationary pain, as businessmen opposed interest rate hikes for obstructing business expansion and job creation. 

Inflationary pressure is being felt severely in the face of wage growth declines.

The target for January-June was 10%

The crawling peg and the mid-rate were introduced on May 8 this year

Kept repo rate at 8.5%, SDF rate at 7% and SLF rate at 10%

The central bank is expected to maintain a tight monetary stance for July-December

The peg system would be linked to a carefully selected basket of currencies and operate within a predefined exchange rate corridor

Bangladesh Bank also raised the benchmark policy rate by 25 basis points to 8 percent

The BB maintained a contractionary policy stance in the July-December of 2023-24

The Federal Reserve of the US and the European Central Bank kept hiking policy rates in their fight against record inflation throughout last year and this year whereas the central bank of Bangladesh chose not to use the full force of the monetary policy.

While the government’s latest monetary policy for the first half of fiscal year 2023-24 shows an attempt to be rational for the market, it lacks vigour to solve inflation and the dollar crisis.

Like in the outgoing financial year, the common people in Bangladesh will continue to suffer from higher consumer prices in 2023-24 as the factors behind the elevated level of inflation are unlikely to change dramatically.

On the surface, the monetary policy appears to be tuned to the need of the hour: bring down inflation and conserve reserves. But it comes caving down on careful reading.