BB defers announcing monetary policy statement

The announcement of the monetary policy statement (MPS) for the second half of this fiscal year FY '26 has been halted for a few days because of some clarifications by the board members of Bangladesh Bank (BB), officials told reporters on Wednesday. The central bank was scheduled to publicly unveil the MPS through a press conference today (29 January 2026). But some of the BB board members at Tuesday's board meeting raised questions why the inflation-containing target has not been achieved despite continuation of a tight monetary policy stance since October in 2024 and sought detailed clarification from the monetary policy department of the central bank, BB officials involved in the MPS said. The BB traditionally announces monetary policy statements in January, be it annual or half-yearly. If this MPS-unveiling program is deferred until next month -February--it will be the second time its tradition is broken.

During 2025 unveiling the key document for the country's finance and economy was deferred to February last year. Seeking anonymity, a BB official said the MPS was one of the key agendas on last Tuesday's BB board meeting to get approved but some of the board members sought clarification over why the inflationary burden has not been controlled as expected despite maintaining tight monetary policy posture. But the board approved the agenda by instructing the monetary policy department to make the detailed clarification in a simple way so that it can be easily understood by all the stakeholders, the central banker said.

"We're preparing a detailed explanation so that businesses and even common people can understand the situation. We're planning to hold the MPS-unveiling-related press conference on February 02 ," the central banker added. Another central banker said monetary policy is one of the components to contain inflation but there are many other inflation-fueling apparatus like fiscal dominance over monetary policy and supply-side shocks. "The transmission of the tight monetary stance on the market is largely hampered because of the non-monetary factors. We're incorporating these in details in the clarification," he added. Monetary policy is one of the most important macroeconomic instruments through which the central bank ensures price stability by controlling the overall money supply, promoting economic growth and employing strategies such as revising interest rates and changing bank reserve requirements.

According to the decision of the monetary policy committee (MPC) meeting held on January 22 last, the policy rate will stay unchanged in the upcoming MPS for the second half of this fiscal year as inflation rebounds after some remission. Despite an outcry from the business circles over higher lending-rate regime amid persisting economic slowdown, the BB continues its tight stance to contain higher inflationary burdens by way of keeping the policy or REPO rate as high as 10 per cent prevalent since October 2024. Under such a tightfisted regulatory stance on money supply meant to check price escalations, BB governor Dr Ahsan H. Mansur on several occasions made a clear statement over adjustment of policy rate that the central bank would continue a tight monetary-policy posture until the inflation rate comes down to 7.0 per cent.

Due to the target, the MPC decided not to make any change to the existing nature of policy stance in the coming MPS for January-June period of the fiscal year 2025-26. According to the data of Bangladesh Bureau of Statistics (BBS), headline inflation relapsed to 8.49 per cent in just-passed December from 8.29 per cent in November and October's count of 8.17 percent.