The Monetary Policy Statement (MPS) for January-June FY2026
The Monetary Policy Statement (MPS) for January-June FY2026
The Monetary Policy Statement (MPS) for January-June FY2026 reflects a cautious strategy by the central bank to control inflation and restore financial stability amidst rising non-performing loans. The MPS sets a real GDP growth target of 5% for H2FY26 and an inflation target of 7%. The policy rate (repo rate) remains unchanged at 10% to help keep inflation down while balancing fiscal targets. The Standing Deposit Facility (SDF) rate was reduced to 7.5% to help revitalize the inter-bank call-money market.
Key Takeaways:
- 5% revised real GDP growth target for H2FY26
- 7% inflation target
- The repo rate 10% unchanged
- Public sector credit is fixed to grow by 21.6%
- Private Sector Credit Growth is set at 8.5%
- The reserve money is set to grow to 8%
Broad money growth in H2FY26 is projected at 11.5%, aligned with the GDP growth target and CPI-based average inflation. Reserve money is projected to grow by 8% in H2FY26, rebounding from -0.1% in June 2025, mainly due to a rise in Net Foreign Assets (NFA). Domestic and private sector credit growth targets of 11.5% and 8.5% signal a policy intent to support productive and employment-generating sectors, especially agriculture and CMSMEs.
The central bank’s policy rate remained the same to 10% as mean of continuing effort taming inflation. As a consequence, the economy and capital market might battle for sustainability and reconsolidating for a future momentum. The weighted average call money rate in the inter-bank call money market eased slightly to 9.99% in December 2025 from 10.14% in June 2025 due to contemporary improved the country’s banking liquidity system.
For capital market incentives, BSEC has implemented regulatory reforms, including the Margin Rules 2025 and updates to IPO, Mutual Fund, and Public Issue Rules, to strengthen risk management, transparency, and governance in the capital market. These measures, along with faster dispute resolution and the Shariah Advisory Council, aim to boost investor confidence, enhance market stability, and support long-term market development.
The Bangladesh economy is at a critical juncture, shifting from risks of a potential economic meltdown toward greater macroeconomic stability and a foundation for renewed growth. Coordinated reform initiatives by Bangladesh Bank have delivered visible improvements in banking sector governance and overall macroeconomic management. Moreover, the economy has demonstrated sufficient resilience to sustain stability even under adverse conditions.