STAR BUSINESS REPORT

The Bangladesh Bank (BB) expects inflation to ease further in the coming months, saying its tight monetary policy has kept real interest rates positive and close to their estimated natural level, even as subdued private investment and mounting external uncertainties weigh on growth.

The findings are part of the central bank’s Monetary Policy Review 2025-26, which compared the current policy stance with a model-based estimate of the natural rate of interest.

The review comes as BB is set to unveil the Monetary Policy Statement (MPS) for the July-December period at 3:00pm today at its headquarters, with the rate widely expected to remain unchanged at 10 percent, according to officials.

BB has kept the policy rate, the rate at which commercial banks borrow from the central bank, unchanged at 10 percent since October 2024, following 11 consecutive hikes between May 2022 and October 2024.

“To curb persistent inflation, stabilise the foreign exchange market, and preserve the resilience of the external sector, Bangladesh Bank maintained its contractionary monetary policy stance by keeping the policy rate at 10 percent throughout the January 2025–June 2026 period,” BB Governor Md Mostaqur Rahman said in the report.

The report credited improving domestic supply conditions, together with its restrictive stance, for helping bring down inflation after more than two years of persistent price pressure. Point-to-point headline inflation fell to 8.49 percent in December 2025, from 10.89 percent a year earlier, though it remained above BB’s 7 percent target ceiling.

More recent data, however, suggest that progress has partly reversed.