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The State Bank of Pakistan (SBP) has decided to keep its benchmark policy interest rate unchanged at 11.50% following the latest meeting of its Monetary Policy Committee (MPC). The decision reflects the central bank’s cautious approach as it continues to monitor inflation, economic growth, and global developments that could influence Pakistan’s financial outlook.
The policy rate has remained at 11.50% since April 27, with policymakers choosing to maintain the current stance despite recent inflationary pressures. During the meeting, the committee reviewed key economic indicators, inflation trends, and the potential impact of geopolitical tensions in the Middle East on Pakistan’s economy.
Speaking at a press conference, SBP Governor Jameel Ahmad said inflation had eased significantly during the first half of the fiscal year. Average inflation between July and February stood at 5.5%, remaining within the lower end of the central bank’s target range. However, rising global oil prices, higher food costs, and increased shipping expenses triggered by tensions in the Middle East placed renewed pressure on prices in the following months.
According to the central bank, inflation rose to 11.7% in May before easing slightly to 11.1% in June. The governor expressed optimism that inflation would begin to decline again from July, with a more noticeable improvement expected after September. For the current fiscal year, the SBP projects average inflation to remain close to 7%.
The governor also highlighted improvements in Pakistan’s broader economic indicators. He noted that the country’s current account deficit narrowed significantly during the previous fiscal year to $139 million, while the current fiscal year’s deficit is expected to remain between zero and one percent of GDP. Strong remittance inflows have played a major role in supporting the external sector, with overseas Pakistanis expected to send around $44 billion this fiscal year, up from $41.6 billion in the previous year.
The SBP also expects exports to improve gradually with government support, stronger performance from the information technology sector, and growth in food exports. While imports have increased, improved external financing has helped meet the country’s payment needs without creating excessive pressure on foreign exchange reserves.
Pakistan’s foreign exchange reserves are projected to remain around $20.2 billion by the end of the year, while the country is expected to meet its external debt obligations through a combination of repayments, refinancing arrangements, and continued financial inflows. The central bank reaffirmed that it will continue to monitor domestic and international economic developments before making any future changes to monetary policy.
