BM Desk: The Bangladesh Bank has hinted at the possibility of a policy rate cut in January 2026, as inflationary pressures are expected to ease by that time, according to discussions held with the visiting International Monetary Fund (IMF) Fifth Review Mission.

The meeting, held  was chaired by Deputy Governor Habibur Rahman and attended by other deputy governors and senior officials of the central bank. The IMF delegation was led by Chris Papageorgiou.

A senior Bangladesh Bank official, who attended the meeting, said the central bank informed the IMF that an adjustment to the policy rate could be made in the upcoming monetary policy statement, expected in January. “We told the IMF that inflation is showing signs of decline and is likely to fall further with the Boro rice harvest. If the trend continues, a rate reduction may be considered,” the official said.

Currently, the policy rate stands at 10 percent, while lending rates hover between 13 to 14 percent.

During the meeting, the IMF questioned the central bank’s recent purchase of over $2 billion from commercial banks through auction operations, suggesting that the move conflicted with the tight monetary stance. Bangladesh Bank officials explained that the dollar purchase was aimed at stabilising the exchange rate amid excess foreign currency holdings in the banking system. “The purchases have now been halted as the situation has normalised,” said a director of the central bank.

The IMF also raised concerns over the recent rise in non-performing loans (NPLs). Bangladesh Bank officials clarified that the increase reflected greater transparency rather than deterioration in loan quality. “Many bad loans were previously underreported. Those figures have now been fully incorporated,” said another official. The IMF welcomed the move toward improved disclosure practices.

In addition, the IMF team reviewed the financial health of state-owned banks, liquidity conditions, recapitalisation measures, foreign currency reserves, and green finance policies. Discussions also covered Bangladesh’s progress on implementing IMF-supported reform conditions, including inflation control, interest rate management, and NPL reduction.

Shahriar Siddiqui, assistant spokesperson of the Bangladesh Bank, said the visit was part of the IMF’s routine review under its loan programme. “The 5th Review Mission is evaluating progress on monetary policy, reserve management, and efforts to stabilise the financial sector,” he noted.

Earlier on Wednesday, the IMF expressed satisfaction with Bangladesh’s performance in maintaining foreign currency reserves and containing inflation, but voiced concern over the low tax-to-GDP ratio and shortfall in revenue collection.