DHAKA : Bangladesh Bank (BB) today maintained its policy repo rate at 10 percent, adopting a cautious monetary policy stance for the July-December 2026 period to contain inflation while safeguarding the country's fragile economic recovery amid mounting global and domestic risks.

Announcing the Monetary Policy Statement (MPS) at the central bank headquarters in the city, BB Governor Md. Mostaqur Rahman said that the central bank would continue its contractionary monetary policy as inflation, though easing, remains well above the government's target.

"Point-to-point headline inflation declined to 9.4 percent in May 2026 from 11.7 percent in July 2024," he added.

However, he stressed that the central bank would maintain a restrictive policy stance to help achieve the government's inflation target of 7.5 percent for FY2026-27.

Under the new policy, the policy repo rate will remain at 10 percent, while the Standing Lending Facility (SLF) rate and Standing Deposit Facility (SDF) rate have been kept unchanged at 11.5 percent and 7.5 percent respectively.

The governor said monetary tightening alone cannot fully address inflation driven by structural market inefficiencies and supply-side bottlenecks, emphasizing the need for coordinated policy measures.

He warned that the global economy continues to face significant downside risks due to geopolitical tensions, including conflicts in the Middle East, which could disrupt the supply of oil and fertilizers and fuel imported inflation in Bangladesh.

Highlighting domestic challenges, the governor said private sector credit growth slowed to 5 percent at the end of May 2026 as banks adopted a cautious lending approach amid rising non-performing loans and increased government borrowing.

He said a substantial portion of excess liquidity has been invested in government securities instead of financing private sector activities.

To support economic recovery without undermining inflation control, the central bank announced a Tk 60,000 crore stimulus package for agriculture, cottage, micro, small and medium enterprises (CMSMEs), and key industrial sectors.

Of the package, Tk 41,000 crore will come from surplus liquidity in the banking system, while the remaining Tk 19,000 crore will be financed from Bangladesh Bank's own sources. 

The initiative is expected to create nearly 25 lakh direct and indirect employment opportunities.

The governor also reaffirmed the central bank's commitment to restoring discipline, transparency and stability in the banking sector through a series of structural reforms.

These include implementation of the Bank Resolution Act 2026 and the Deposit Protection Act 2026, finalisation of the Distressed Asset Management Act (DAMA) to facilitate resolution of non-performing assets without using public funds, introduction of the Expected Credit Loss (ECL) framework under IFRS 9, and strengthening of Risk-Based Supervision (RBS).

The governor said Bangladesh Bank would continue to monitor inflation, financial sector vulnerabilities and external developments closely while maintaining a market-based exchange rate regime to preserve macroeconomic stability.

Deputy governors and senior officials, among others, were present on the occasion.