For nearly two years, Bangladesh’s central bank treated high interest rates as its primary weapon against persistent price pressures, raising its benchmark policy rate from 8.5% to 10%. Last week, the central bank finally relented, trimming its policy rate by 50 basis points to 9.5%. Yet, in an economy constrained by structural bottlenecks and mounting bad debts, loosening monetary policy resembles pushing on a string. Aggregate liquidity masks deep institutional fragility, leaving weak banks incapable of extending productive credit regardless of central bank policy. Increased demand for foreign currency to settle import bills has pushed the dollar gradually higher in recent months.