ISLAMABAD – The State Bank has decided to keep the policy rate unchanged, with the interest rate to remain at 10.5 percent for the next one and a half months.
According to reports, a meeting of the State Bank’s Monetary Policy Committee (MPC) was held today to decide the policy rate.
Following the meeting, State Bank Governor Jameel Ahmad held a press conference in which he announced the decision regarding the interest rate.
The governor also announced a one percent reduction in the rate at which banks are required to deposit cash, setting it at 5 percent.
According to the Monetary Policy Committee, inflation stood at 5.6 percent in December, while core inflation remained stable at 7.4 percent. Economic growth was faster than expected and is likely to remain at around 4.75 percent in fiscal year 2026. An increase in imports led to a wider trade deficit, while the current account deficit remained under control. Foreign exchange reserves stood at $16.1 billion and are expected to exceed $18 billion by June. A significant increase in private sector credit was also recorded.
The MPC noted that FBR revenue remained below the target, resulting in a shortfall of Rs329 billion. It was decided to reduce the cash reserve ratio for banks from 6 percent to 5 percent.
Inflation during the current fiscal year is expected to remain within the target range of 5 to 7 percent. Private sector credit increased by Rs578 billion. The current account deficit stood at $244 million in December 2025, while the cumulative deficit in the first half of the fiscal year was $1.2 billion. The main reasons were higher imports and lower exports, while remittances and ICT exports helped keep the deficit under control.
