Inflation may come down to 5% by FY26: governor

The central bank expects inflation to come down to 5 percent by the end of the current fiscal year, Bangladesh Bank Governor Ahsan H Mansur said today.

Speaking at an investment dialogue organised by the Bangladesh Investment Development Authority in Dhaka, Mansur said that inflation had peaked at over 12 percent in 2024, but recent trends indicate improvement.

"Food inflation has dropped to 7.3 percent, and overall inflation now stands at 8.2 percent. If this trajectory continues, we are on track to bring it down to 5 percent," he said.

Achieving the target is a prerequisite for easing the policy interest rate, which remains high to contain inflationary pressure.

"We cannot reduce interest rates unless real interest rates remain positive. Inflation control is the first step toward creating room for lower borrowing costs," he added.

The governor said effective inflation management will also help stabilise the exchange rate, strengthen investor confidence, and support long-term economic growth.

He said that abrupt administrative rate cuts would be counterproductive and could fuel renewed price instability.

"We are committed to a rule-based approach. Once inflation is sustainably below 7 percent, policy rates will adjust accordingly," he added.