Bangladesh has entered a new monetary phase marked by high interest rates and persistent inflation. With the repo rate held at 10 per cent to curb inflation, the country is attempting to maintain a delicate balance between stabilising prices and sustaining economic growth. But every policy creates winners and losers, and in today's Bangladesh, that divide is becoming increasingly visible.
The strategy of Bangladesh Bank is to contain inflation, even at the cost of slower economic expansion. Inflation has remained stubbornly high, hovering around 8-9 per cent in early 2026, driven largely by rising food prices and supply-side pressures. Despite aggressive monetary tightening, the results have been mixed. Monetary policy alone has struggled to control inflation because of structural problems such as supply chain inefficiencies and currency depreciation.
In this situation, the winners are savers and fixed-income households, financial institutions, and exporters. For the first time in years, savers are seeing real returns. Higher interest rates mean better yields on deposits and government savings instruments. This is a rare advantage for middle-class households that rely on interest income. On the other hand, banks with strong balance sheets are benefiting from wider interest margins, earning more from loans than they pay on deposits. However, this advantage is conditional, as rising loan defaults could quickly erode these gains. Besides, earlier sharp depreciation and ongoing currency adjustments have made Bangladeshi goods cheaper abroad, supporting export growth projections.
Conversely, the losers are small enterprises, growth-dependent sectors, consumers, borrowers, low-income households, and importers. Higher borrowing costs have made access to credit more difficult. Small businesses that depend on loans for working capital are delaying investment, slowing job creation and industrial momentum.
Bangladesh's new monetary reality is not experienced uniformly. It rewards patience, savings, and financial discipline while penalising borrowing, risk-taking, and excessive consumption. The longer high interest rates persist, the greater the risk of a prolonged economic slowdown.
Tahmid Hasnine Tashfin
Department of Accounting & Finance
North South University
tahmid.tashfin@northsouth.edu
