The Bangladesh Bank (BB) today said it would keep its policy rate unchanged to tame the runaway inflation, which averaged 10.34 percent over the past 12 months.

The central bank said it would keep its key policy rate unchanged at 10 percent for the January-June period of 2025 to further reduce inflation, according to the latest monetary policy unveiled today.

Inflation, which surpassed 11 percent in July 2024, declined to 9.94 percent in January 2025.

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Food prices—a major driver of inflation—followed a similar trend, dropping from 12.92 percent in December 2024 to 10.72 percent in January of this year, thanks to the arrival of winter vegetables in the markets.

Despite this progress, supply chain inefficiencies remain a key factor behind the elevated costs, particularly for staples like rice, onions, and potatoes, according to a report by the finance ministry.

The latest monetary policy, however, showed a softer stance from the BB, which has been hiking the policy rate—the interest at which it lends to commercial banks—for nearly two and a half years since May 2022 in its battle against spiraling prices, which devastated people's purchasing capacity and affected domestic demand.

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Mansur, who joined as central bank governor in August of last year following the political changeover, hiked the policy rate, or repo rate, three times.

In December of last year, the International Monetary Fund (IMF) said near-term policy tightening is crucial to address the emerging external financing gap and persistently high inflation.