State Bank keeps monetary policy rate unchanged at 11pc

The State Bank of Pakistan (SBP) kept its policy rate unchanged on Wednesday at 11 per cent. The central bank’s policy rate, after being slashed by 1,000bps from 22pc since June 2024 in seven intervals, was cut to 11pc in May. The bank had kept the rate unchanged on June 16 as well. A press release issued by the SBP said its Monetary Policy Committee noted that inflation in June had decelerated to 3.2pc year on year, led mainly by lower food prices, whereas core inflation also declined slightly. However, it noted that the inflation outlook had worsened in the wake of higher-than-anticipated adjustment in energy prices, especially gas tariffs. “Nonetheless, inflation is projected to stabilise in the target range going forward. “Moreover, economic activity is gaining further traction amidst the still-unfolding impact of the earlier reductions in the policy rate. At the same time, the committee noted that the trade deficit is expected to widen further in FY26 amidst the pickup in economic activity and slowdown in global trade. Given this macroeconomic outlook and the emerging risks, the MPC considered today’s decision as necessary to ensure price stability,” the SBP said of the decision to keep the policy rate unchanged.