The Monetary Policy Committee (MPC) of Bangladesh Bank (BB) has decided to maintain its contractionary stance, keeping the policy rate unchanged at 10% to continue curbing inflationary pressures.
The decision was made at the MPC meeting in the first week of this month, chaired by Bangladesh Bank Governor Ahsan H Mansur.
The committee reviewed domestic and global economic conditions and noted that inflation has gradually eased, supported by a positive real interest rate.
The real policy rate, which was negative by nearly 2% a year ago, improved significantly to 1.64% by the end of September 2025.
Headline inflation declined to 8.36% in September, down from 9.91% a year earlier.
Food inflation dropped sharply to 7.64% (from 10.40%), while non-food inflation eased to 8.98% (from 9.49%).
Core inflation, excluding food and fuel, fell to 6.19% from 8.95% in June.
The central bank also observed easing rates in the money market. The average call money rate fell to 9.74% in October (from 10.01% in June 2024), and the interbank repo rate decreased to 9.88% from 10.07%.
A significant downward shift in the yield curve was noted, reflecting increased investor interest in government treasury bills and bonds.
Exports remained moderate, but imports surged after the central bank relaxed Letter of Credit (LC) margins on essential commodities ahead of Ramadan.
Remittance inflows strengthened during July-September, supporting the external sector amid a flexible exchange rate regime.
The MPC recommended efforts to build foreign exchange reserves, monitor the US dollar index, and ensure market communication aligned with global best practices to preserve exchange rate competitiveness.
The MPC is cautious about the potential rise in household spending due to Ramadan and the possible announcement of a new national pay scale.
However, the committee expressed optimism that inflation would moderate as the Aman harvest and winter crops improve food supply, global commodity prices continue to soften, and the exchange rate remains reasonably stable.
After reviewing the evolving macroeconomic situation, the MPC decided to keep the policy or repo rate unchanged at 10%.
The Standing Deposit Facility (SDF) rate will also remain at 8%, while the Standing Lending Facility (SLF) rate stays fixed at 11.5%.
The committee further stressed that the ongoing tightening measures will continue until the real policy rate rises to 3%.
LND/SAE
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