Bangladesh Bank has decided to keep its key policy rate unchanged at 9.50 percent for the second quarter (October–December) of the current fiscal year also maintaining a contractionary monetary stance to curb inflationary pressures.
Deputy Governor Habibur Rahman announced the decision during a press briefing at the central bank headquarters on Wednesday. The policy rate has remained steady since July, when it was reduced by 50 basis points from 10 percent.
Explaining the rationale behind retaining the rate, Deputy Governor Rahman highlighted lingering uncertainties in the inflation outlook. He warned that the government's recently announced pay scale hike for public employees could generate demand-side pressures and potentially disrupt the ongoing disinflation process.
"There is hesitation on our part regarding how far the disinflation path can hold going forward," Rahman noted and adding that keeping the real interest rate positive remains crucial to containing price pressures.
Addressing the central bank's shift to a quarterly monetary policy announcement cycle, Rahman explained that three-month reviews align with global practices. He noted that while peer nations like India review policies every two months, Bangladesh currently lacks the rapid data collection infrastructure required for shorter cycles, particularly regarding delayed industrial production figures from the Bangladesh Bureau of Statistics.
All other monetary policy targets from the previous quarter remain unchanged as the central bank continues to prioritize price stability over rapid credit expansion.
