Bangladesh Bank Cuts Interest Rates to Stimulate Growth

Bangladesh Bank has reduced its benchmark policy rate by 50 basis points to 7.25%, the first rate cut in 18 months, signalling confidence that inflation has moderated sufficiently to allow monetary easing in support of private sector credit growth.

Monetary Policy Context

Inflation fell to 6.2% in May from a peak of 10.1% in 2024, driven by improved food supply chains, taka stabilisation and global commodity price softening. The central bank has maintained a hawkish stance for six consecutive quarters but now sees room to support growth.

Impact on Borrowers

Banks must transmit the cut within 60 days. Analysts expect home loan rates to fall to 8.5-9.5%, SME lending rates to 10-11% and agricultural credit to remain subsidised at 4%.