Karachi (Web Desk): The State Bank of Pakistan (SBP) has opted to keep its benchmark interest rate unchanged at 11%, defying market forecasts that had anticipated a further reduction amid easing inflation and the broader objective of stimulating economic activity.
SBP Governor Jameel Ahmed announced the decision following the latest Monetary Policy Committee (MPC) meeting.
Addressing a press conference in Karachi, the SBP governor acknowledged that while consumer price inflation had reached a trough in April, it registered a slight uptick in May and June.
This upward movement was largely attributed to rising energy tariffs and the statistical base effect. He cautioned that inflationary pressures may persist modestly in the coming months, driven primarily by continued volatility in energy costs.
On the external front, the governor highlighted encouraging signs, noting that the country’s exports had recorded a 4% increase.
He emphasized that sustained growth in exports is essential for preserving the stability of the current account.
In addition, a substantial rise in workers’ remittances—amounting to $8 billion—provided further support to the external sector, helping maintain the current account in surplus.
The SBP governor further stated that Pakistan had successfully honoured all of its external debt commitments on schedule.
He said that despite making $26 billion in foreign payments, the central bank’s foreign exchange reserves have grown by $5 billion, signalling improved external sector resilience.
“Inflation currently stands at 7.2%, with expectations that it will range between 5% and 7% over the course of the fiscal year,” Jameel said.
The SBP governor also pointed to positive developments in the agricultural sector, which is beginning to recover and is expected to contribute to broader economic expansion in the current financial year.
The SBP’s decision to hold the policy rate steady reflects a careful balancing act—aiming to safeguard macroeconomic stability while remaining vigilant to potential inflationary risks.