KARACHI – As anticipated, State Bank of Pakistan (SBP) announced to keep key interest rate unchanged at 11%, citing inflation patterns and economic recovery that largely meet expectations.
In a statement, the central bank said inflation is expected to rise moderately in the short term but stay within the target range throughout the fiscal year 2025–26. The committee also pointed to gradual economic improvement, which is likely to gain further momentum over the next year due to the delayed effects of previous rate reductions. However, it noted growing risks on the external front.
This decision came during the regular meeting of the SBP’s Monetary Policy Committee (MPC), which observed that inflation in May increased by 3.5% year-on-year, matching forecasts, while core inflation saw a slight decrease.
MPC cautioned that the continued widening of the trade deficit along with weak financial inflows remain challenges. Additionally, some of the fiscal year 2025–26 budget measures could lead to increased imports, putting additional pressure on the trade balance.
In light of these factors, the MPC stressed that maintaining the current policy rate is vital to uphold macroeconomic and price stability moving forward.
The next monetary policy meeting is slated for August 2025, when the committee will review the latest economic developments.
