Bangladesh Bank to announce new monetary policy today

Bangladesh Bank is set to announce its new monetary policy on Wednesday (September 30), seeking to keep inflation under control while boosting private-sector credit and investment amid sluggish economic activity.

The policy for the October-December quarter will be unveiled at a press conference at 3pm at the Jahangir Alam Conference Room at the central bank’s headquarters.

Deputy Governor Dr Md Habibur Rahman will attend the briefing as the chief guest.

Inflation and private-sector credit growth are expected to remain key focuses of the new policy. Private-sector bank credit grew 4.62% year-on-year at the end of July, up slightly from 4.47% in June, while inflation remained above 8%.

The central bank has set a 6.80% target for private-sector credit growth by the end of December. However, weak investment, business uncertainty, energy shortages and high borrowing costs have discouraged businesses from taking on new loans, according to industry insiders.

Bangladesh Bank cut its policy rate from 10% to 9.50% on August 2 in an effort to support investment and economic activity. Banks and businesses are now watching whether the central bank will keep the rate unchanged or make another adjustment in the new policy.

Headline inflation eased slightly to 8.26% in August from 8.32% in July, marking its lowest level in 10 months. However, inflation above 8% continues to put pressure on household expenses.

Against this backdrop, how the central bank balances inflation control with efforts to revive credit demand and investment is expected to be a key feature of the new monetary policy.