Karachi, July 30, 2025 – The State Bank of Pakistan (SBP) has decided to keep the benchmark policy rate unchanged at 11%, citing mounting inflation risks and a shifting macroeconomic landscape.
In a statement issued after the Monetary Policy Committee (MPC) meeting on Wednesday, the SBP said that although headline inflation slowed to 3.2% year-on-year in June—driven by lower food prices and slight declines in core inflation—the outlook remains vulnerable. The Committee pointed out that inflationary pressures are expected to persist due to the recent surge in energy prices, particularly gas tariffs, which could push inflation beyond the target range in the coming months.
The SBP highlighted that inflation expectations have slightly increased among consumers, although businesses are showing signs of optimism. The MPC reaffirmed its commitment to maintaining a positive real interest rate to keep inflation anchored within the 5–7% target range, despite the short-term risks.
The Committee also noted key economic indicators reflecting gradual recovery, including growth in automobile sales, fertilizer offtake, and manufacturing activity. The agriculture sector is also expected to rebound, supported by improved water availability.
On the external front, SBP reserves crossed $14 billion in June, backed by improved inflows and a current account surplus of $2.1 billion for FY25. However, the trade deficit is forecasted to widen in FY26 as domestic activity picks up.
Inflation will remain a central concern moving forward, as energy costs and global market volatility could undermine price stability. The SBP projected its reserves to rise to $15.5 billion by December 2025, while inflation, though currently subdued, may fluctuate under global and domestic pressures.
The SBP emphasized the need for structural reforms and continued policy discipline to ensure sustainable economic growth and long-term inflation control.