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Bangladesh Bank (BB) Governor Ahsan H Mansur outlined the central bank’s monetary policy for the second half of FY25, indicating that the country’s economic growth will slow down to 4-5% this year.
He made the remarks while addressing in a press conference on Monday.
He highlighted that political instability and ongoing macroeconomic issues would likely result in no investment growth for FY25, though inflation is projected to ease, with a target of 7-8% by June and further dropping to 5% by next year.
Governor Mansur emphasized that the central bank’s primary tool, monetary policy, is focused on managing inflation, acknowledging the limits of such policies in fostering overall economic growth. With inflation remaining above 10% for an extended period, the BB is hopeful that a stable exchange rate will significantly reduce price pressures.
Despite a contractionary stance, with the policy rate remaining at 10%, the central bank refrained from increasing borrowing costs, noting that inflation had shown signs of easing in December. The decision to maintain the policy rate was welcomed by banking sector leaders, with private sector credit demand declining, though concerns about sluggish investment persist.
The central bank’s monetary policy also addressed the potential impact of rising non-performing loans (NPLs) in the banking sector, which are expected to exceed 30% of total loans. BB has initiated measures to stabilize liquidity in struggling banks and is continuing banking sector reforms to address these challenges.
Governor Mansur also projected an additional inflow of $11 billion through remittances and exports in FY25, which he hopes will help stabilize the foreign exchange market and reduce inflationary pressures. He further emphasized the importance of inter-ministerial coordination in recovering laundered money, with efforts now underway to reclaim both domestic and international assets.
Despite facing significant challenges, including a slowdown in private sector credit growth and concerns over rising NPLs, the central bank remains optimistic about achieving gradual stabilization and long-term economic recovery.
