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BB cuts policy rate by 0.5 percentage point despite high inflation
Published : Thursday, 30 July, 2026 at 10:58 PM
Business Correspondent
Bangladesh Bank has cut its key policy rate by 50 basis points to 9.5%, the first reduction in 22 months, even though inflation remains high. The new rate will take effect from August 2, following a decision at the Monetary Policy Committee (MPC) meeting on Thursday.
The central bank said the committee reviewed both domestic and global economic conditions before taking the decision. It looked at inflation, investment, private sector credit growth, employment, economic growth and the country's external balance.
Along with the repo rate, Bangladesh Bank also reduced the Standing Lending Facility (SLF) rate by 50 basis points to 11%. However, it kept the Standing Deposit Facility (SDF) rate unchanged at 7.5%, leaving the lower end of the interest rate corridor intact.
The MPC meeting, the first of the current fiscal year, was chaired by Governor Mostakur Rahman. Deputy Governor Habibur Rahman, economist Mustafa K. Mujeri, BIDS Director General A.K. Enamul Haque, Dhaka University Economics Department Chair Ferdousi Nahar, Chief Economist Mohammad Akhtar Hossain and Executive Director Imam Abu Sayeed also attended.
Bangladesh Bank began raising the policy rate in late 2022 to tackle soaring inflation. Despite those moves, inflation stayed in double digits for several months and reached a peak of 11.66% in July 2024. After the interim government took office in August 2024, the central bank adopted a tighter monetary policy and continued increasing interest rates. In October 2024, the policy rate was raised to 10%, where it remained until this latest decision.
The lower policy rate means commercial banks will be able to borrow from Bangladesh Bank at a cheaper cost. That could gradually reduce lending rates and make borrowing less expensive for businesses and consumers.
According to the latest data from the Bangladesh Bureau of Statistics (BBS), inflation eased slightly to 9.16% in June from 9.42% in May. However, it has remained above 9% for three straight months since April. Average inflation for FY2025-26 stood at 8.68%.
-HIS
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Published by the Editor on behalf of the Observer Ltd. from Globe Printers, 24/A, New Eskaton Road, Ramna, Dhaka.
Editorial, News and Commercial Offices : Aziz Bhaban (2nd floor), 93, Motijheel C/A, Dhaka-1000.
Phone: PABX- 41053001-06; Advertisement: 41053012; 01793317829, 01550707291, E-mail: [email protected], [email protected] Online: email: [email protected] 41053014; 01550707297 Advertisement: 01550707296
