ISLAMABAD: The Monetary Policy Committee (MPC) of the State Bank of Pakistan on Monday decided to keep the policy rate unchanged at 11 percent, marking the fourth consecutive meeting in which borrowing costs have been held steady.
The SBP’s decision comes at a time when the central bank is juggling modest economic growth, external‐sector vulnerabilities and inflation risks. After having slashed rates significantly in 2024, it entered a pause campaign earlier this year, choosing stability over further easing given flood-related supply disruptions, rising food inflation and pressures on the current account.
“The Monetary Policy Committee decided to keep the policy rate unchanged at 11 percent in its meeting held on October 27, 2025,” the central bank said on X.
The central bank added that the current account deficit is expected to remain within the 0–1 percent of GDP range in fiscal 2026, with the realization of official inflows projected to raise foreign exchange reserves to $15.5 billion by December 2025 and around $17.8 billion by June 2026.
Last week, all 10 analysts surveyed by Reuters said they expected the State Bank of Pakistan (SBP) to keep the policy rate unchanged, extending its pause as recent floods ravaged farmland and border closures with Afghanistan since Oct. 11 drove up prices of staples like tomatoes and apples.
“The SBP [maintained] status quo amid concerns about rising inflation following flood losses and [to] support rupee,” Ahsan Mehanti of Arif Habib Commodities said, attributing the central bank decision to the “IMF (International Monetary Fund) pressure to keep a tight fiscal and monetary policy.”
The SBP last held rates in September, warning floods could push inflation above its 5–7 percent target. Pakistan’s headline inflation rate accelerated to 5.6 percent on a year-on-year basis, up 2 percent from the previous month.
Monsoon floods swamped farmland and industrial hubs in Pakistan’s breadbasket Punjab province, killing more than 1,000 people nationwide, displacing 2.5 million and damaging crops and factories.
The central bank has lowered rates by 1,100 basis points since June 2024, when they peaked at 22 percent after inflation neared 40 percent the year before. Its last 100-bps cut came in May, followed by holds in June, July, and September amid uncertainty over energy and food prices.
