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“These higher interest rates are leaving the private sector unable to borrow, which is constraining the private sector’s expansion,” said Ha-Meem Group’s Azad, one of Bangladesh’s leading exporters.

Echoing the same, Transcom Group CEO Simeen Rahman said the combined effect of inflation and elevated lending rates had slowed growth and consumer spending. “Our economy is going through challenges both in terms of growth and consumer spending.”

GPH Group Chairman Mohammad Jahangir Alam noted that Bangladesh’s 10 percent policy rate contrasts with the lower rates in competing countries, except Pakistan.

“If the policy rate comes down, lending rates will also fall and businesses will get some relief,” said Alam, also president of Bangladesh Steel Manufacturers Association.

He also pointed to treasury bonds yielding 11-12 percent, which have become more attractive to banks than lending to businesses.

“As a result, banks are choosing the risk-free option of investing in treasury bonds instead of supporting industries. That is why we are facing a credit shortage,” he said.

He urged the central bank to reduce both the policy rate and the yield on treasury bonds, saying businesses could survive if bank loans were priced 2-3 percent below bond returns.

Governor Mansur acknowledged the strain caused by the high interest rate but said rate cuts would only follow a sustained drop in inflation.

“The interest rate is certainly high. But globally, there is usually a gap of at least 2-3 percent between the policy rate and inflation,” he said.

“Our inflation rate is still 8.2 percent. I will lower the interest rate once it comes down,” he said.

However, he also criticised the government’s policy. “Inflation could have been lower, but the government’s policy failures are behind it not falling further.”

Turning to external balances, the governor said foreign exchange conditions had improved ahead of Ramadan.

“Last year’s Ramadan was the most difficult period for managing foreign exchange liquidity. But this year, we are not seeing signs of stress,” he said.

He said all import LCs for essentials had been opened, while LC openings across product categories had risen sharply from a year earlier.

“Imports have increased, showing double-digit growth this month. Yet even then, there is no exchange rate pressure now,” he said.

Bangladesh Institute of Development Studies Director General AK Enamul Haque, City Bank Managing Director and CEO Masrur Arefin also spoke at the event.