SBP Holds Interest Rate at 11.50 pc as Inflation Outlook Improves

The Central Bank of Pakistan has decided to keep the key interest rate unchanged, maintaining a prudent monetary policy. The State Bank of Pakistan said that the policy rate has been maintained at 11.50 percent, taking into account the overall decline in inflation, improvement in the external sector and the foreign exchange situation.

The statement and press briefing issued after the meeting of the Monetary Policy Committee chaired by State Bank Governor Jamil Ahmed said that although inflation has seen a significant decline in recent months, the ongoing global uncertainty, especially tensions in the Middle East, is still among the key factors affecting the economic scenario. In this context, the committee considered it appropriate to maintain the current interest rate.

According to the central bank, Pakistan’s current account deficit remained at a limited level during the last fiscal year, while pressure on the external accounts is expected to remain under control in the new fiscal year as well. The State Bank estimates that the country’s economy will continue to receive support from exports, remittances and other external financial inflows.

Governor Jamil Ahmed said that the government’s foreign exchange reserves are expected to reach $20.20 billion by December 2026. According to him, the reserves have been strengthened by purchasing dollars from the interbank market over the past few years, while the trend of improving reserves has continued despite all external payments.

He said that capital is also continuously being transferred to Pakistan through Roshan Digital Accounts, and about $300 million has been received in this regard during the last four months, which is a positive indication of the increase in external financial resources.

Giving a briefing on external debt, the Governor said that a total of $21.5 billion in payments are expected in the fiscal year 2026-27; however, a significant portion of them consists of rollover facilities, which will keep the immediate financial pressure relatively low. He said that work is also underway to reduce the burden of payments by making debt management more effective.

According to the Governor of the State Bank, the government’s external debt remains close to the June 2022 level, while the private sector is meeting its financial needs through external investment and loans. He also emphasised that the significant reduction in forward liabilities has reduced external payment risks.

Regarding economic activities, the State Bank estimated that Pakistan’s economic growth rate could remain between 3.5 and 4.5 percent during the current fiscal year. According to the central bank, financial stability, inflation trends and global economic conditions will play a key role in future monetary policy decisions in the coming months.

The State Bank clarified that the objective of the current policy is to maintain price stability, support economic recovery and ensure the strength of the external sector so that sustainable economic growth can be achieved in the medium term.