In a major shift from its prolonged contractionary stance, Bangladesh Bank has unveiled a balanced monetary policy statement (MPS) for the second half of 2026.
To drive this economic recovery, the regulator announced a massive Tk60,000 crore special stimulus package.
Unveiling the monetary blueprint at the central bank's headquarters on Tuesday, Governor Md Mostaqur Rahman outlined a policy direction designed to ease credit bottlenecks.
Deputy Governor Habibur Rahman presented the core technical keynote, highlighting a deliberate shift away from aggressive tightening toward growth-supportive stabilization.
The primary focus of the new monetary roadmap is lifting private sector credit growth out of its multi-year slump.
Central bank planners have established a clear trajectory to rebuild credit flows to businesses and industrial houses.
The slump down to 5.5% growth by June 2026—one of the lowest levels in recent history—stemmed from high policy interest rates, strict import controls, and weak business confidence.
By introducing the Tk60,000 crore injection and stabilizing the currency market, the central bank expects credit demand from private enterprises to bounce back strongly over the next 12 months.
To make more liquid funds available for private enterprises, the MPS outlines a clear plan to gradually reduce the government's heavy reliance on commercial bank borrowing.
Public sector credit growth peaked at a massive 28.9% in December 2025, effectively crowding out private borrowers.
By steering state deficits toward non-bank funding options, central bank planners expect government credit growth to cool to 17.2% by June 2027. This shift will give commercial banks significantly more room to support private capital investment.
The central bank is managing this liquidity expansion carefully to prevent sparking new inflationary pressures:
- Broad Money (M2) Expansion: Broad money growth is projected to scale up from 10.8% in June 2026 to 11.5% by December 2026, eventually reaching 13.0% by June 2027.
- Net Domestic Assets (NDA): Domestic assets are forecast to track upward from 9.2% to 12.6% by the close of the fiscal year.
- Overall Domestic Credit Limit: Total domestic credit expansion will be kept steady within a tight 10% to 10.5% band to keep macro-monetary stability intact.
With the money multiplier projected to hold steady around 5.30, commercial banks will maintain a stable capacity to create credit from their core deposit bases.
This stability is further reinforced by a positive outlook for Net Foreign Assets (NFA), driven by steady remittance inflows, stronger export earnings, and a stable exchange rate.
Bangladesh Bank's new policy stance marks a pragmatic evolution in its economic strategy.
While inflation control remains a top priority, the central bank recognizes that prolonged credit starvation risks causing long-term industrial damage.
