Bangladesh Bank has decided to keep its key policy interest rate unchanged at 9.50 per cent for the October–December 2026 quarter, pointing to persistent underlying inflationary risks despite recent moderation in price indices.
The announcement was made on Wednesday by Deputy Governor Dr Habibul Rahman at the central bank’s headquarters, with senior officials in attendance. The decision follows the 14th meeting of the Monetary Policy Committee (MPC) held on 23 September. Alongside the policy rate, the Standing Lending Facility (SLF) rate remains fixed at 11.00 per cent, whilst the Standing Deposit Facility (SDF) rate stands at 7.50 per cent.
Inflation Dynamics and Key Economic Indicators
While overall inflation eased to a 10-month low of 8.26 per cent in August—down from 9.16 per cent in June—the decline was predominantly driven by a retreat in food inflation to 7.02 per cent. Non-food inflation remains stubborn at 9.32 per cent, leaving household budgets under sustained pressure. The central bank warned that premature monetary easing could unmoor inflation expectations and prolong the journey back towards stability.
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| ECONOMIC & MONETARY INDICATORS AT A GLANCE |
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| Indicator | Figure |
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| Policy Interest Rate | 9.50% |
| Standing Lending Facility (SLF) Rate | 11.00% |
| Standing Deposit Facility (SDF) Rate | 7.50% |
| Head-line Inflation (August 2026) | 8.26% |
| Head-line Inflation (June 2026) | 9.16% |
| Food Inflation (August 2026) | 7.02% |
| Non-Food Inflation (August 2026) | 9.32% |
| Real GDP Growth Estimate (FY 2025–26) | 4.14% |
| Projected Q3 GDP Growth (FY 2025–26) | 2.20% |
| Industrial Output Contraction (FY 2025–26, Q3) | -0.28% |
| Private Sector Credit Growth (August 2026) | 4.75% |
| Non-Performing Loan (NPL) Ratio (June 2026) | 32.78% |
| Total Stimulus & Financial Support Package | BDT 60,000 Cr |
| Re-opening Package for Closed Factories | BDT 20,000 Cr |
| Remittance Growth (First Two Months, FY 2026–27) | 18.90% |
| Balance of Payments Surplus (FY 2025–26) | $6.60 Billion |
| World Bank GDP Forecast (FY 2026–27) | 4.60% |
| IMF GDP Forecast (FY 2026–27) | 3.50% |
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Growth Headwinds and Industry Stagnation
Domestic economic momentum remains constrained. Real Gross Domestic Product (GDP) growth for the 2025–26 financial year has been estimated at 4.14 per cent, though third-quarter growth slumped to 2.20 per cent amidst a 0.28 per cent contraction in industrial output.
High borrowing costs, energy shortages, infrastructure bottlenecks, and broader uncertainty around domestic and external demand continue to weigh on the real economy. Private sector credit growth hovered at a sluggish 4.75 per cent in August 2026, reflecting investor hesitation and institutional weaknesses within the banking sector. Non-performing loans (NPLs) scaled a concerning 32.78 per cent in June 2026, reinforcing the urgent need for structural governance reforms, capital restoration, and stricter credit discipline.
Policy Response and External Balance
To reinvigorate industrial output, Bangladesh Bank highlighted liquidity support schemes totaling BDT 60,000 crore, including a BDT 20,000 crore package targeted at re-opening closed manufacturing plants alongside refinance schemes for agriculture, CMSMEs, and export diversification. However, central bank officials emphasised that monetary tools alone cannot resolve supply-side bottlenecks without complementary fiscal and structural reforms.
On the external front, the balance of payments registered a surplus of $6.6 billion in FY 2025–26. While the financial account slipped into deficit during the first two months of FY 2026–27, an 18.90 per cent surge in remittance inflows has offered crucial cushion, stabilizing exchange rates and containing imported inflation.
Looking ahead, multilateral lenders present divergent outlooks for FY 2026–27: the World Bank projects economic expansion at 4.60 per cent, whereas the International Monetary Fund has lowered its trajectory to 3.50 per cent. Central bank leadership confirmed it will remain data-dependent, balancing price stability with targeted credit flows to support sustainable economic recovery.
