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BB to announce a new monetary policy on Thursday
Bangladesh Bank is set to announce a new monetary policy on Thursday for the first half of the current fiscal year 2025-26.
Meanwhile, the central bank has completed preparation for announcing a new slightly expansionary monetary policy, reducing interest rates to enhance credit flow in the private sector, said a senior official of the monetary policy department.
Bangladesh Bank followed a contractionary monetary policy in the last two fiscal years to halt growing inflation. As a result, the private sector credit flow fell below 7 percent in June 2024, due to the high interest rates.
A contractionary monetary policy is a type of monetary policy that is intended to reduce the rate of monetary expansion to fight inflation.
The business community and individual borrowers were suffering from higher interest rates due to the contractionary monetary policy. The interest rate jumped to 15/16 percent when the central bank lifted the single cap on interest rates in May 2024, reports UNB.
Bangladesh Bank formally instructed banks to set a maximum 9 percent interest rate on all loan products (except credit cards) with effect from April 1, 2020.