# Bangladesh Bank keeps repo rate at 10% as inflation stays above target

**Published:** 2026-07-02T20:49:26.928Z  
**Topic:** Inflation  
**Sentiment:** neutral  
**Publisher:** TrendWatcher — https://www.trendwatcher.in/article/06682a1e-4fc2-4758-a233-b0623a11af8d

Bangladesh Bank is expected to hold the policy repo rate at 10% on June 30, with May inflation at 9.42% versus a 7% target, signaling continued tight stance.

Bangladesh Bank is poised to leave its policy repo rate unchanged at 10% on June 30, while point‑to‑point inflation in May held at 9.42%, still above the central bank’s 7% goal and the 12‑month average remaining over 8.6%【1】. The decision underscores the authority’s priority of curbing price pressures even as private credit growth slows.

| At a glance | |
|---|---|
| Repo rate | 10% (unchanged) |
| May inflation (point‑to‑point) | 9.42% |
| 12‑month inflation average | >8.6% |
| Target inflation | 7% |

## Policy stance and inflation backdrop  
Bangladesh Bank has pursued a contractionary stance since the first half of FY2023‑24, raising the repo rate in stages to reach 10% by October 2024 to tighten liquidity and dampen demand【1】. Although inflation has eased from double‑digit levels last year, it remains “stubbornly high” and above the 7% target, prompting the bank to maintain a restrictive monetary environment【1】. Analysts note that supply‑side factors—such as exchange‑rate depreciation, higher import costs and domestic market inefficiencies—are driving much of the price rise, limiting the effectiveness of rate adjustments alone【1】.

## Credit growth and targeted support  
Private sector credit growth has markedly slowed, reflecting elevated borrowing costs, weak business confidence and cautious bank lending【1】. To offset the credit squeeze, policymakers are considering targeted liquidity measures, including a possible cap on banks’ lending‑deposit spread and sector‑specific refinance schemes【1】. These steps aim to channel liquidity toward productive areas without reigniting inflationary pressures.

## Wider macro considerations  
In the United States, former Fed governor Kevin Warsh highlighted the emerging uncertainty around AI’s impact on inflation, suggesting that central banks may need to factor new technology‑driven price dynamics into future policy decisions【2】. While unrelated to Bangladesh’s immediate policy, the commentary signals a broader trend of central banks grappling with novel inflation drivers, which could influence global capital flows and emerging‑market financing conditions.

## What to watch  
- Bangladesh Bank’s Monetary Policy Statement on June 30 for any revisions to the repo rate or new liquidity tools.  
- Upcoming CPI releases in Bangladesh, especially the next month’s point‑to‑point and 12‑month figures, to gauge whether inflation is trending toward the 7% target.  
- Statements from U.S. Federal Reserve officials on AI‑related inflation risks, which could affect global monetary policy expectations.

Holding the repo rate at 10% signals that Bangladesh’s monetary authority remains focused on price stability despite a cooling credit environment, leaving the path to sustainable growth dependent on targeted liquidity support and supply‑side reforms.

## Sources
1. The Business Standard — [Cenbank to unveil new monetary policy tomorrow; no change to 10% policy rate likely](https://www.tbsnews.net/economy/banking/cenbank-unveil-new-monetary-policy-tomorrow-no-change-10-policy-rate-likely-1475456)
2. Crypto Briefing — [Warsh: Central bank must assess AI’s inflation impact](https://cryptobriefing.com/warsh-central-bank-must-assess-ais-inflation-impact/)
3. Crypto Briefing — [SARB to address inflation as CPI in May 2026](https://cryptobriefing.com/sarb-to-address-inflation-as-cpi-in-may-2026/)

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Cite as: TrendWatcher, "Bangladesh Bank keeps repo rate at 10% as inflation stays above target", https://www.trendwatcher.in/article/06682a1e-4fc2-4758-a233-b0623a11af8d