Headlines
BB cut the policy rate to 9.5%; development spending hit a 53-year low.
Food's Share of Spending Rises as Income Falls
An IMF chart, built on USDA data, plots food spending as a share of GDP against food's share of total consumer spending. Poorer economies sit further up and further right on both scales.
- ▸Advanced economies hold the bottom-left corner. Food takes roughly 5 to 22 percent of consumer spending in that group, on food outlays worth under about 13 percent of GDP.
- ▸Emerging markets spread across the whole middle of the chart. Their markers run from about 11 percent of consumer spending to above 40 percent, and the group overlaps the advanced cluster at one end and the low-income band at the other.
- ▸Low-income developing countries occupy the top-right. Every marker in that group sits above roughly 29 percent of consumer spending, and the highest of them approach 55 percent.
A household that already spends half its money on food has no cheaper category to move into, so a price rise comes out of everything else it buys. The IMF places Bangladesh in the low-income group at the upper right of this chart. Food and beverages carry the largest single weight in the Bangladesh CPI basket, which is the same fact seen from the other side.
Food inflation belongs in the credit process, not only in the macro commentary. A price move reaches disposable income before it reaches any borrower's file, and the thinnest-buffer books — retail, microfinance-linked exposure, small-ticket SME — feel it first. A risk team reading food prices only off the monthly CPI print is working from the slowest signal available.
Policy & Rates (Bangladesh Bank)
BB cut the policy rate 50bp to 9.5%; call money hasn't followed.
FX Reserves
WATCH
- ◆The next FY27 bill auction — whether the front follows the cut or holds the 40-52bp July repricing
- ◆The next reserves print to supersede the 1 May $34.55bn read
- ◆Whether the 14-day call above 10% breaks lower after the 31 Jul month-end turn
RISK
- ▼BB easing ahead of a market that's tightening — pressure on the 122.85 peg and reserves
- ▼The cut compressing the real policy rate below 1% into 9%+ non-food inflation
- ▼Month-end funding tightness lifting term rates into early August despite the cut
The week's pivot is a policy-rate cut. BB took the rate 50bp to 9.5% — the first move off the 10% level held since the April MPS — and the signal matters more than the 50bp. It comes with the interbank market pulling the other way: the 14-day call money sat at 10.38% into month-end, above even the old policy, while the front bill curve holds its 40-52bp July repricing. So BB is easing into a market that is tightening, against 9.09% non-food inflation and a peg pinned at 122.85 on a reserve read still dated 1 May. Read it as a growth call — development spending at a 53-year low, ADP at a record 67.52%, private credit at a 60-period 6.03% — not a disinflation dividend. For the desk: the cut lowers the policy anchor but not yet the funding cost; keep term funding hedged into the August auction and treat the real policy rate, now below 1%, as the pressure point on the taka.
Banking
Merger resolution advanced all week; the Q1 book unmoved — NPL 32.26%, CAR 1.56%.
WATCH
- ◆Whether Q2 2026 statements land the court-stayed loan overhang on BSEC's quarterly clock
- ◆Any Q2 CAR disclosure superseding the Sep 2025 1.56% read
- ◆Whether the 50bp policy cut reaches SCB funding costs or just the private book
RISK
- ▼Foreign banks' 11% lending pullback in 2025 thinning cross-border credit
- ▼The court-stayed loan stock understating the printed 32.26% NPL ratio
- ▼S&P's negative outlook lifting bank funding costs offshore into the cut
Banking spent the week advancing process while the book stood still. Administrators are out and new MDs are in at the resolved banks, and a Tk10 lakh withdrawal cap holds depositor confidence as the mergers proceed — resolution visible in the machinery. But the numbers have not moved: NPLs hold 32.26% on the Q1 print and CAR reads 1.56% on the September figure, 844bp below the 10% floor — a cushion absent, not thin. Foreign banks cut lending 11% in 2025, pulling the cross-border credit the weakest balance sheets can least replace. Friday's 50bp policy cut lowers the funding cost of the repair, but it reaches the private compounders long before the SCB tail. The dispersion stays the trade — own the compounders, fade the SCB scrip.
FX & External
USD/BDT held 122.85 all week; cover +$1.05bn as the cut tilts FX risk.
External Flow Balance
Trade gap held $1.77bn all week — exports $4.03bn, remittance $2.82bn — leaving $1.05bn of monthly cover as the peg stayed 122.85.
The peg has held 122.85 for a twelfth session; reserves still read 1 May's $34.55bn.
Treasury: the 50bp cut widens the carry gap defending the peg — hedge FX while the $1.05bn cover is still positive.
WATCH
- ◆Whether the 122.85 peg holds now that BB has cut into a pegged, thin-reserve setup
- ◆The next reserves print superseding the 1 May $34.55bn read
- ◆Brent back at $89.45 and the FSRU outage bidding up spot LNG on the import side
RISK
- ▼The 50bp cut widening the carry gap that pressures the peg and reserves
- ▼A spot-LNG month turning the $1.05bn cushion negative as the FSRU stays down
- ▼S&P's negative outlook lifting the offshore funding the reserve build leans on
DSE Markets
DSEX round-tripped the week — broke 5,784, retook 5,900, closed 5,878.85.
DSEX Index
DSEX round-tripped the week — a 5,900 line broken to 5,784, retaken, then eased to 5,878.85 at Thursday's close.
From the 9 Jul reopen floor near 5,804 — a 5,926 high on 20 Jul, broken and round-tripped this week.
Equity desk: Friday's 50bp cut is a fresh tailwind for the bank-heavy float — watch whether 5,900 turns to support on Sunday's reopen.
WATCH
- ◆Whether the 50bp policy cut lifts the bank-heavy float when trading resumes Sunday
- ◆Whether 5,900 caps the index again or turns to support after the round-trip
- ◆Turnover on the reopen — whether the volume that confirmed the reclaim persists
RISK
- ▼A rate-cut pop mistaken for a credit-cycle repair — NPLs still 32.26%
- ▼S&P's negative outlook repricing the bank-heavy float on the next catalyst
- ▼The FSRU/LNG outage pressuring export-sector earnings under the index
T-Bonds & T-Bills
The repriced bill curve held all week — 364d 10.09%, dis-inverted; 10y steady 10.24%.
BD Govt Yield Ladder
The repriced bill curve held all week — 364d 10.09%, 182d 9.99%, 91d 9.79% — the front inversion cleared and steady.
The 364d held 9.57% through eleven prints before its 52bp jump to 10.09% two auctions ago — steady since.
ALCO: the front sits 40-52bp dearer than a month ago; watch whether the next auction follows Friday's 50bp cut lower.
WATCH
- ◆Whether the next auction follows the 50bp cut lower or holds the 10.09% 364d level
- ◆The 10y at 10.24% — whether duration supply cheapens it toward the 10.34% recent high
- ◆5s10s at 56bp — the slope repricing any long-dated fixed-rate book
RISK
- ▼The cut and the front's 40-52bp July repricing pulling term rates in opposite directions
- ▼Duration marks if the 10y cheapens toward 10.34% to match the bill repricing
- ▼The FY27 borrowing programme still clearing 40-52bp dearer than a month ago
Macro & Inflation
On the March prints credit held 6.03% — a 60-period low — as BB eased.
CPI Trend
CPI 12m-avg held 8.6% on the March print — food 8.24%, non-food 9.09% — disinflation has flattened, not resumed.
The 12m-avg is lowest since Mar 2023 (8.4% then), with food lowest since Dec 2025 (7.7% then).
MPC: BB cut 50bp anyway — but with non-food at 9.09%, the cut can't reach cost-push inflation; watch the next CPI print.
WATCH
- ◆The next CPI print — the first to carry the July oil spike into a 9.09% non-food line
- ◆Private credit at 6.03% — whether the next print breaks the 60-period low after the cut
- ◆Import cover 5.86mo on the March read — lowest since Feb 2026 (5.3 then)
RISK
- ▼The 50bp cut compressing the real policy rate below 1% — from 1.29% on the March print
- ▼Private credit at a 60-period 6.03% low as development spending hits a 53-year low
- ▼REER at 102.78 keeping the taka dear while exports face a 15% FY27 growth test
Remittance
Remittance held $2.82bn all week; cover stays $1.05bn over the trade gap.
Remittance Inflow
WATCH
- ◆The next monthly print — whether $2.82bn is a floor or the top of a slide
- ◆BB's new PayPal, Payoneer-style rails — a structural add to the inflow channel
- ◆How much of the $1.05bn cushion a spot-LNG month gives up as the FSRU stays down
RISK
- ▼A spot-LNG-heavy import month turning the $1.05bn cover negative
- ▼The 50bp cut widening the carry gap the remittance cushion must defend
- ▼The line flat across the window — not growing while the bill it funds moves
Commodities
Gold jumped ~$150 to $4,168.30 on the week; the FSRU outage lifts LNG risk.
WATCH
- ◆LNG spot against the stale 20 Apr $15/MMBtu print — the FSRU outage now hitting cargoes
- ◆Whether gold's ~$150 weekly bid extends or fades if the Gulf premium rebuilds
- ◆Food and energy import lines bidding for the same $1.05bn monthly cushion
RISK
- ▼A terminal-driven spot LNG print well above $15/MMBtu into the monsoon month
- ▼Gold's safe-haven bid signalling risk-off into a thin-reserve FX setup
- ▼Pass-through into a 9.09% non-food CPI line on the March print
Fiscal
Development spending fell to a 53-year low; ADP implementation a record-low 67.52%.
NBR Tax Revenue
Monthly NBR collection printed flat again, holding the YTD line at Tk3.61tn — no new receipt across the fourteen-print window.
Fourteen prints, all Tk3.61tn — the last new monthly figure predates the window as development spending hits a 53-year low.
Treasury: revenue frozen while BB cuts and S&P stays negative — FY27 funding costs rise against a flat receipt line; watch the next print.
WATCH
- ◆The next monthly NBR print — the Tk3.61tn line hasn't moved across the window
- ◆FY26 ADP at a record-low 67.52% — whether the political transition keeps dragging execution
- ◆Development spending at a 53-year low against the FY27 borrowing programme
RISK
- ▼A corporate-tax take half the peer rate — the base is thin, not just flat
- ▼Development spending contracting into a private-credit 60-period low
- ▼S&P's negative outlook lifting the cost of the FY27 borrowing programme
Iran War & Oil
Brent round-tripped the week — off $100, back to $89.45, above the $80 line.
Brent Crude
Brent ticked to $89.45 and WTI to $84.05 — off last week's $100 break but back above the week's $87 low.
Brent now prints $9.45 above the $80 FY27 line, having round-tripped from the $100 it touched last week.
Treasury: crude relief partial, but the FSRU shutdown shifts energy risk to spot cargo — the import bill stays $9.45 above budget.
WATCH
- ◆Whether Brent holds near $89 or the Gulf premium rebuilds on renewed escalation
- ◆The FSRU shutdown — two spot-LNG cargoes disrupted, now into the monsoon month
- ◆The FY27 subsidy provision against a spot price still $9.45 above its $80 assumption
RISK
- ▼The FSRU outage forcing costlier spot LNG onto the $1.05bn monthly cushion
- ▼Brent back above $89 pass-through into a 9.09% non-food CPI line
- ▼A spot-LNG spike offsetting the crude relief on the import bill
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