The State Bank of Pakistan (SBP) has decided to maintain its benchmark policy interest rate at 11.50% following the latest meeting of its Monetary Policy Committee (MPC), signaling a cautious approach as the central bank balances inflation risks with improving economic indicators. The decision reflects the SBP’s strategy of closely monitoring domestic inflation, global commodity prices, and geopolitical developments before making any changes to monetary policy.
According to SBP Governor Jameel Ahmad, inflation remained under control during the first half of the fiscal year, averaging 5.5% between July and February. However, rising international oil prices, higher food costs, and increased shipping expenses caused by tensions in the Middle East pushed inflation to 11.7% in May before easing slightly to 11.1% in June. The central bank expects inflationary pressures to begin easing from July, with more significant improvement anticipated after September, while projecting average inflation to remain around 7% for the current fiscal year.
The central bank also highlighted encouraging signs in Pakistan’s economy. The current account deficit narrowed significantly to $139 million during the previous fiscal year, while strong remittance inflows are expected to reach approximately $44 billion this year. Exports are also projected to improve gradually with government support, growth in the information technology sector, and stronger food exports. Pakistan’s foreign exchange reserves are forecast to reach $20.2 billion by the end of the fiscal year, supported by external financing and refinancing arrangements.
Despite these positive developments, the SBP emphasized that global uncertainty, particularly geopolitical tensions and volatile energy prices, continues to pose risks to inflation and economic stability. The Monetary Policy Committee reiterated that it will continue evaluating domestic and international economic conditions before making future adjustments to the policy rate, aiming to maintain price stability while supporting sustainable economic growth.
