Bangladesh Bank is encountering hurdles in curbing enduring high inflation despite implementing a restrictive monetary policy, which could jeopardize policy reliability and create ambiguity for investors, according to BB Chief Economist Mohammad Akhtar Hossain. During a session titled “Doing Business in Bangladesh” at the Bengal Delta Conference 2026, hosted by the Dacca Institute of Research and Analytics at InterContinental Dhaka, Akhtar emphasized the significance of stable prices and a predictable macroeconomic landscape in attracting investments and bolstering business activities.
For over three years, Bangladesh has been contending with stubbornly high inflation levels, even after the BB raised the policy rate to 10 percent in October 2024, maintaining it since then. In June this year, the 12-month average inflation stood at 8.68 percent, down from 10.13 percent a year earlier.
The BB official highlighted that persistent high inflation has solidified due to escalating inflation expectations, posing challenges for the effectiveness of the contractionary monetary policy in controlling price escalations. Akhtar cautioned that a shift to double-digit inflation could exacerbate the situation, erode trust in the central bank, and diminish the efficacy of the restrictive monetary policy.
While acknowledging that factors like supply shocks, supply chain disruptions, conflicts, and external influences contribute to inflation, Akhtar stressed that an excessive focus on these factors could distract from monetary policy efforts and diminish its effectiveness in managing inflation.
He emphasized that businesses find uncertainty—whether linked to inflation, economic conditions, or government policies—disruptive to investment decisions. Akhtar proposed that Bangladesh should embrace a credible, rule-based monetary policy framework targeting sustained low and stable inflation to instill confidence.
He suggested that such a framework could revolve around inflation targeting, monetary targeting, or another transparent policy rule, as long as the central bank remained dedicated to achieving its set objectives. Furthermore, Akhtar underscored the importance of upholding macroeconomic stability and implementing fiscal and banking sector reforms to enhance the business environment in Bangladesh.
