KARACHI: The State Bank of Pakistan (SBP) has opted to maintain its key policy interest rate at 11%, according to Governor Jameel Ahmed, following the latest meeting of the Monetary Policy Committee (MPC).
At a press conference in Karachi, the SBP chief noted that while inflation hit a low in April, it rose slightly in May and June due to energy price hikes and base effects. He warned that inflation may edge up further in the near term, mainly due to persistent energy cost pressures.
On the external front, exports rose 4%, while remittances increased by $8 billion—key factors in maintaining a surplus in the current account. Foreign reserves also saw a $5 billion rise, despite $26 billion in debt repayments.
The SBP said economic activity continues to recover, particularly in agriculture, boosting optimism for the ongoing fiscal year.
The MPC noted that although inflation forecasts have worsened slightly due to increased gas tariffs, it is expected to stabilize within the 5–7% range. The committee added that economic momentum may lead to a higher trade deficit in FY26 as global trade slows.
Pakistan’s improved sovereign credit rating has helped reduce Eurobond yields and credit default swap (CDS) spreads, reflecting improved investor confidence.
The central bank emphasized that future inflation control depends on maintaining a positive real policy rate and called for structural reforms to support long-term economic growth.
The decision aligns with IMF reforms under a $7 billion programme and follows a 100-basis-point cut in May.
