BM Desk : By the end of July, the Bangladesh Bank will make an announcement regarding its new monetary policy. The institution has stated that in order to manage inflation and promote economic expansion, it will abandon the current stringent stance.

According to sources, in accordance with directives from the International Monetary Fund (IMF), the central bank is getting ready to make a minor change in the policy interest rate. On the other hand, traders anticipate that the new policy will be favorable to investment and that political stability will persist in addition to a modest drop in loan interest rates.

Sources close to policy discussions suggest the central bank may move away from its current contractionary stance, which was primarily designed to tackle persistently high inflation in previous quarters. Instead, the focus could now shift toward a more flexible and growth-friendly approach, while still keeping inflation in check.

 Interest Rate Strategy Under Scrutiny

While inflation control remains a top priority, there is speculation that the bank may keep the policy rate unchanged or adjust it modestly. Authorities are reportedly weighing the risks of further rate hikes, which could dampen investment and slow economic recovery.

“Maintaining a delicate balance between inflation control and growth is now essential,” said an official familiar with the central bank’s preparations.

External Sector in the Spotlight

Amid ongoing pressure on the foreign exchange market and a dip in foreign reserves, the policy is also expected to include targeted measures to stabilize the exchange rate and rebuild the reserve buffer. Economists believe that the policy could also feature macroprudential tools to manage external imbalances, which have become increasingly challenging due to global commodity price volatility and remittance fluctuations.

Policy Objectives

According to preliminary insights, the overarching goals of the July 2025 MPS include:

• Ensuring macroeconomic stability
• Maintaining inflation within a manageable range
• Supporting sustainable economic growth
• Reinforcing market confidence in the Taka

However, the collapse of the government during the student-public uprising on August 5, the former bureaucrat went into hiding, submitting his resignation letter via e-mail from an undisclosed location on August 9. After the new government was established, the esteemed economist Dr. Ahsan H. Mansur was appointed as the governor.

Upon assuming office, the new governor found that the interest rate on short-term loans from the central bank to commercial banks was set at 8.50 percent. This rate was subsequently raised by 50 basis points in three increments, reaching 10 percent. Consequently, consumer interest rates have risen and now surpass 15 percent. Despite this increase, discussions about further raising the policy interest rate have emerged. Nevertheless, recent estimates indicate a slight decrease in inflation as of January. Therefore, the policy interest rate will remain unchanged for the time being. However, in light of investment and employment considerations, business entrepreneurs have been advocating for a reduction in the interest rate instead of an increase.