The Bangladesh Bank has announced its decision to keep the key policy rate unchanged at 10% for the January-June 2025 period, aiming to further curb inflation, which has averaged 10.34% over the past 12 months.
Unveiling its latest monetary policy on Monday (10 February), the central bank underscored the necessity of maintaining the current rate to consolidate the recent gains in controlling price pressures.
Inflation in Bangladesh is projected to ease to 7-8% by June 2025, according to Bangladesh Bank Deputy Governor Habibur Rahman.
He made this announcement during a presentation outlining the monetary policy for the second half of the fiscal year 2024-25.
Inflation, which had surged past 11% in July 2024, declined to 9.94% in January 2025, signalling a gradual easing of economic strain.
Food prices, a primary driver of inflation, mirrored this downward trend, dropping from 12.92% in December 2024 to 10.72% in January 2025.
The seasonal influx of winter vegetables has played a pivotal role in moderating food costs.
However, persistent inefficiencies within the supply chain continue to exert upward pressure on essential commodities, particularly staples such as rice, onions, and potatoes, as highlighted in a report by the finance ministry.
The latest monetary policy reflects a relatively softer stance from the central bank, which has been incrementally raising the policy rate since May 2022 to combat soaring inflation.
Prolonged period of rate hikes has significantly eroded household purchasing power and dampened domestic demand.
Since assuming office in August 2024, following the country’s political transition, BB Governor Mansur has raised the policy rate, also known as the repo rate, on three occasions.
His tenure marks a continued commitment to monetary tightening, albeit with a more measured approach.
The International Monetary Fund (IMF) had, in December 2024, emphasised the importance of near-term policy tightening to address emerging external financing gaps and to contain persistently high inflation.
The central bank’s latest decision appears to balance these external recommendations with the evolving domestic economic landscape.
