State Bank of Pakistan Keeps Policy Rate Unchanged at 11.5pc

The State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) on Monday decided to keep the interest rate unchanged at 11.5 per cent.

SBP Governor Jameel Ahmed announced the decision during a press conference. At the start of the press conference, the governor said, “MPC has decided to keep the policy rate unchanged at 11.5pc”.

“There were several reasons for this, but I would like to explain some background: every time we hold committee meetings in January and July, we also issue projections for the next six months and what would be the level of economic growth, inflation outlook and situation of the external account; I will share that assessment as well.”

The governor said inflation had been falling during the first half of the previous year, but “the fallout from the Middle East crisis impacted our domestic situation”.

“From July to February, our average inflation was 5.5pc,” which remained within the government’s target range of 5-7pc.

However, inflation started rising due to the Middle East crisis. “In June, it was at 11.1pc, and in May, it stood at 11.7pc, and we are hoping that if there is no further escalation, then after one to two months, we will see a decline in inflation,” he said.

“We believe that towards the end of June next year, it will be within the upper band of our target range, either a little over seven or close to seven,” he said, while warning that “there are still risks associated due to the direct impact of the geopolitical situation”.

“Overall, inflation from this (existing) level will see an improvement,” he added.

Analysts had expected the central bank to keep the interest rate unchanged, saying that maintaining macroeconomic stability would be difficult amid slow economic growth.

Surveys by brokerage houses showed that more than 90pc of stakeholders expected the SBP to keep the policy rate unchanged, while only a small number expected a modest increase.

The SBP reduced its policy rate by 50 basis points to 10.5pc in December 2025 before raising it by 100 basis points to 11.5pc in April this year. The rate has remained unchanged since then despite calls from the business community for a significant reduction to support economic activity.