Former interim government chief adviser’s special assistant Fayez Ahmad Tayyeb warned that lower interest rates, higher reserve money, increased cash holdings amid weak banking confidence and flood-driven price increases are creating multiple inflationary pressures. Inflation reached a 16-month high of 9.42 percent in May 2026 before easing to 9.16 percent in June, while the writer said flooding could push it higher in July. The government’s budget target is 7.5 percent.

The government cut the repo rate by 0.5 percentage points to 9.5 percent and reduced the Standard Lending Facility ceiling to 11 percent. Tayyeb argued that these measures could expand money supply and directly affect inflation. He said the average banking spread was 5.72 percent against a government-set 4 percent cap, with 56 of 61 banks above the limit. After inflation adjustment, the real deposit interest rate was negative 2.8 percent.

The article said Tk19,000-20,000 crore of a Tk60,000 crore package for reopening closed factories would come from central bank reserve money. Reserve money growth reached 12.1 percent in January-June of fiscal 2025-26, above the 8 percent projection. Bangladesh Bank’s model projects 8.6 percent inflation in June 2027, exceeding the announced target.