Why Your Bank Savings Account Is Losing the Inflation Race Right Now

If you put money in a Bangladeshi bank savings account or a fresh one year fixed deposit this month, there is a good chance you are losing money in real terms the moment you sign the form. Several big commercial banks have cut their one year deposit rates twice in the past two months, down to 7.5 percent at some of the country's best known names, while inflation in September stood at 8.34 percent. The arithmetic is not complicated: a return below inflation means your taka buys less a year from now than it buys today, even after the bank pays you interest.

• One year fixed deposit rates at several top banks, including Brac Bank, Dutch-Bangla Bank, and City Bank, have fallen to 7.5 percent.
• Prime Bank is offering 7.75 percent on comparable one year deposits.
• September's inflation rate was 8.34 percent, meaning these deposit rates trail inflation by roughly half a percentage point to a full point.
• Rates have fallen fast: 9 percent to 10.15 percent in July, 8.5 percent to 9 percent in August, and now 7.5 percent to 8 percent at several banks.

How Fast Rates Have Fallen

The speed of the decline is what has caught savers off guard. One year fixed deposit rates at several large banks stood at 9 percent to 10.15 percent in July. By August they had slipped to 8.5 percent to 9 percent. By October several big names, Brac Bank, Dutch-Bangla Bank, and City Bank among them, were quoting 7.5 percent, with Prime Bank slightly ahead at 7.75 percent. Each cut has come in steps of 50 to 100 basis points, and banks have made two such cuts in two months.

On a Tk10 lakh deposit, the gap between July's rate and October's rate is the difference between roughly Tk1 lakh and Tk75,000 in annual interest, before tax and other deductions. For a household relying on that interest to cover a meaningful share of monthly expenses, that is not a rounding error.

Why This Is Happening Now

The deposit rate cuts trace back to a problem on the other side of the balance sheet: banks have more money than they can lend. Total banking sector liquidity reached Tk781,214 crore by the end of August against a statutory minimum requirement of Tk339,260 crore, leaving roughly Tk442,000 crore in surplus liquidity. Average deposit growth ran at 11.96 percent over the first eight months of the year, with some top tier banks adding deposits even faster, at 15 percent to 22 percent, while private sector credit growth stayed below 5 percent for more than six months. Bank Asia's advance to deposit ratio, for instance, is close to 60 percent, meaning a large share of the deposits it takes in simply are not going out the door as loans.

With that much idle cash and limited loan demand, banks have little reason to pay up for new deposits. Falling yields on government treasury bills, where much of the surplus liquidity has been parked, are adding to the pressure, since banks earn less on that money too. Bangladesh Bank's own policy rate cut, from 10 percent to 9.5 percent, meant to encourage cheaper lending, has had the side effect of pulling deposit rates down as well.

Fixed Deposit Rates Versus Inflation, Month by Month

Month (2026)	Typical 1-Year FDR Rate	Inflation Rate
July	9.0% to 10.15%	around 8.3% to 8.5%
August	8.5% to 9.0%	around 8.3%
September to October	7.5% to 8.0%	8.34%

Bangladesh Bank has itself acknowledged the squeeze. The central bank's banking sector update has noted that real returns on fresh deposits were still positive from mid 2025 through early this year, but fell to near zero by March, and economists tracking the trend since say the gap has only widened as rates kept falling while inflation stayed stubborn. "Depositors continue to experience near zero real returns," the central bank said in that update, adding that "it is important to balance interest rates to protect depositors while promoting affordable credit."

"As interest rates drop, ordinary citizens, especially retired individuals, will come under pressure," said Fahmida Khatun, distinguished fellow at the Centre for Policy Dialogue. "In a market economy, rates follow supply and demand."

What It Means for Your Money

If you are rolling over a fixed deposit soon, it is worth shopping around rather than automatically renewing at your existing bank's quoted rate. Weaker banks that still need to attract deposits are generally offering higher rates than the strongest, most liquid banks, so there is a genuine spread to compare. The site's FDR rate comparison tool lets you check current offers across banks side by side, and the FDR and DPS calculator can show what a given rate actually works out to in taka over your deposit term, before and after factoring in tax.

Retirees and anyone depending heavily on interest income are in the toughest spot, since they often cannot simply wait out a few quarters of poor rates. Mustafa K Mujeri, a former chief economist at Bangladesh Bank, suggests savers weigh alternatives such as National Savings Certificates, commonly known as Sanchayapatra, which have historically offered better returns than bank FDRs, though with their own purchase limits and rules. He also points to the capital market as an option for those able to tolerate some risk of loss, though he is careful to note it is not a substitute for guaranteed returns.

Before chasing the highest advertised rate, it is worth remembering Mujeri's other point: a bank's financial health matters as much as its headline rate. A troubled bank offering an unusually generous rate to attract deposits is not necessarily a bargain.

"Earning lower returns remains a major challenge for depositors," said Mujeri, who also argued that if lower deposit rates eventually feed through to lower loan rates, that could help revive the business borrowing that is missing right now.

No Quick Fix in Sight

Economists are not expecting fixed deposit rates to bounce back soon. The underlying cause, a banking sector with far more deposits than creditworthy borrowers, is a structural problem tied to weak private investment, not a temporary blip that a single policy move will reverse. Until loan demand recovers, savers should plan around today's lower rates rather than today's inflation rate catching down to them.