KARACHI — The State Bank of Pakistan (SBP) has decided to maintain the policy rate at 11.5%. This decision by the Monetary Policy Committee (MPC) is aimed at managing inflationary pressures effectively in the current economic climate.
Inflation and Economic Indicators
The MPC has observed a rise in headline inflation amid economic uncertainties influenced by ongoing Middle East conflicts. Although global oil prices have slightly eased due to positive geopolitical developments, they remain above pre-conflict levels.
Significant increases in inflation were noted, particularly in April and May, with core inflation also climbing. The committee observed signs of moderation in economic activities.
Monetary Policy Assessment
The MPC believes that keeping the current policy rate will steer inflation toward its medium-term target range of 5% to 7%. Although external account pressures remain stable and the macroeconomic outlook is unchanged, global developments and central banks’ rising policy rates underline the committee’s cautious approach.
Future Economic Projections
The committee emphasized the need for proactive macroeconomic management and structural reforms to bolster economic resilience and growth. It projects a real GDP growth of 3.7% for the fiscal year 2026, with an expected primary balance surplus of 2.5% of GDP.
Additionally, the committee noted improvements in consumer and business confidence, along with an increase in SBP’s foreign exchange reserves to $17.2 billion.
