B Mirror Report: Bangladesh Bank has maintained its contractionary monetary policy stance to curb inflation, keeping the policy (repo) rate unchanged at 10 percent in its Monetary Policy Statement (MPS) for the first half of fiscal year 2026-27 (July-December). At the same time, the central bank announced a Tk 60,000 crore special stimulus package aimed at supporting the industrial, agricultural and cottage, micro, small and medium enterprise (CMSME) sectors.

The new monetary policy was unveiled on Tuesday by Bangladesh Bank Governor Mostakur Rahman at the central bank’s Jahangir Alam Conference Hall in Dhaka. Deputy governors, executive directors, directors and other senior officials were present at the announcement.

According to Bangladesh Bank, Tk 41,000 crore of the stimulus package will be financed from excess liquidity in the banking sector, while the remaining Tk 19,000 crore will be provided by the central bank. The initiative is expected to generate direct and indirect employment opportunities for around 2.5 million people.

Speaking at the event, Governor Rahman said containing inflation remains the central bank’s top priority. However, he stressed that targeted credit support would continue to boost production, investment and employment.

The Monetary Policy Statement also kept the Standing Lending Facility (SLF) rate unchanged at 11.5 percent and the Standing Deposit Facility (SDF) rate at 7.5 percent.

Bangladesh Bank noted that inflation had peaked at 11.7 percent in July 2024 before easing to 9.4 percent in May 2026. Despite the decline, inflation remains above the desired level, prompting the central bank to retain its tight monetary policy stance.

The central bank said that raising interest rates alone would not be sufficient to control inflation, citing supply chain weaknesses, structural market challenges and cost-push inflation driven by global uncertainties as key contributing factors.

The MPS identified geopolitical tensions in the Middle East, potential disruptions to fuel and fertilizer supplies, and continued global economic uncertainty as major risks to Bangladesh’s economy.

As part of ongoing banking sector reforms, Bangladesh Bank announced measures to reduce non-performing loans through stricter audits, implementation of the IFRS 9-based Expected Credit Loss (ECL) framework, enhanced risk-based supervision, and enforcement of the Bank Resolution Act 2026 and the Deposit Protection Act 2026.

The central bank also plans to introduce the Distressed Asset Management Act (DAMA) and amend the Money Loan Court Act to expedite the resolution of defaulted loans.

To promote digital payments, Bangladesh Bank said it would launch an interoperable “Bangla QR” system, enabling seamless digital transactions between banks and mobile financial service providers.

The central bank expressed optimism that rationalization of the tax and tariff structure under the new national budget, along with the newly announced stimulus package, would gradually boost economic growth and private investment. Nevertheless, it cautioned that inflation, energy supply challenges, financial sector vulnerabilities and global economic uncertainty will remain key challenges in the coming months.