Elevated policy interest rate is likely to stay unchanged in the upcoming monetary policy stance (MPS) for the second half (H2) of this fiscal year as inflation rebounds after some remission.
Despite an outcry from the business circles over higher lending-rate regime amid persisting economic slowdown, Bangladesh Bank (BB) continues its contractionary monetary-policy stance to contain higher inflationary burdens by way of keeping the policy or REPO rate as high as 10 per cent prevalent since October 2024.
Under such tightfisted regulatory stance on money supply meant to check price escalations, Bangladesh Bank governor Dr Ahsan H. Mansur on several occasions made a clear statement over adjustment of policy rate that the central bank would continue a tight monetary-policy posture until the inflation rate comes down to 7.0 per cent.
Because of the target, the monetary policy committee (MPC) at its 10th meeting early November last decided not to make any change to the existing nature of policy stance until the next MPS for January-June period of the fiscal year 2025-26 be announced on January 29, 2026.
According to the data of Bangladesh Bureau of Statistics (BBS), headline inflation relapsed to 8.49 per cent in just-passed December from 8.29 per cent in November and October's count of 8.17 per cent.
As part of the upcoming half-yearly MPS, the banking regulator has already started meetings with the stakeholders to elicit their opinions before the finish.
Seeking anonymity, a BB official says they have been holding meetings with various stakeholders since December 17 last taking opinions from the central bankers holding positions of director and above.
On December 29 last, according to the official, they also sat with the stakeholders like economists, senior bank executives and media personalities at a city hotel where many of them backed BB's current policy on inflation combat and suggested that the regulator continue the policy stance until the inflation target is reached.
"The interest-rate corridor may remain unchanged in the upcoming MPS due to recent spikes in inflation rate," the central banker told The Financial Express.
He adds that the regulator will hold stakeholder meetings in Barishal tomorrow (January 8) and in Rangpur on January 15 next.
Thereafter, the outcomes of the meeting will be thoroughly discussed in the MPC (monetary policy committee) meeting to be held on January 22 before taking final decision that needs to be approved by the BB board members on January 25, according to the central bank source.
Interest corridor is an interest-rate managing band where policy rate -- now 10 per cent -- stays in the middle and the upper ceiling of the band which is called SLF or sanding lending facility (currently 11.50 per cent) while the floor rate is known as SDF or standing deposit facility, which is currently 8.0 per cent.
On condition of not to be quoted by name, another BB official says the possibility of adjustment, especially in policy rate, in the coming MPS seems very slim if the policy is not tilted at the last minute considering economic growth and pains of the businesses.
Regarding the projection of private-sector credit growth, the central banker says the projection was 7.20 per cent in the first-half MPS that ended on December 31st last and 8.0 per cent by end of June next but the growth was 6.58 per cent until November last.
He expects the private-sector credit demand to increase in the last quarter of this FY'26 that will start in April after the 13th parliamentary election scheduled for February 12th, 2026.
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