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Pakistan Keeps Policy Rate Steady at 10.5%
The State Bank of Pakistan kept its benchmark policy rate unchanged at 10.5% in March, as expected, extending the pause in its easing cycle. Policymakers cited heightened economic uncertainty as oil prices surged amid escalating tensions in the Middle East. Pakistan remains particularly vulnerable to rising energy costs due to its heavy reliance on imported fuel, which has widened the current-account deficit and pushed inflation to 7% in February, the highest since October 2024. A prolonged energy shock could also pressure the rupee and complicate the country’s commitments under its IMF stabilization program. Analysts warn the fuel price increase could push inflation to around 9.25% in the second quarter. Meanwhile, the government’s 4.2% GDP growth target for the fiscal year ending July is becoming harder to achieve amid the Middle East crisis, severe monsoon floods that displaced roughly three million people, and supply-chain disruptions linked to clashes with Afghanistan.
Published on 2026-03-09

Pakistan Keeps Policy Rate Steady at 10.5%
The State Bank of Pakistan kept its benchmark policy rate unchanged at 10.5% in March, as expected, extending the pause in its easing cycle. Policymakers cited heightened economic uncertainty as oil prices surged amid escalating tensions in the Middle East. Pakistan remains particularly vulnerable to rising energy costs due to its heavy reliance on imported fuel. A prolonged energy shock could also pressure the rupee and complicate the country’s commitments under its IMF stabilization program. Analysts warn the recent fuel price increase could push inflation to around 9.25% in the second quarter, with headline inflation having risen to 7% in February, the highest since October 2024. Meanwhile, the government’s 4.2% GDP growth target for the fiscal year ending July is becoming increasingly challenging amid the Middle East crisis, severe monsoon floods that displaced roughly three million people, and supply-chain disruptions linked to clashes with Afghanistan.
Published on 2026-03-09

Pakistan Keeps Policy Rate Steady at 10.5%
The State Bank of Pakistan kept its benchmark policy rate unchanged at 10.5% in March, in line with market expectations, citing heightened economic uncertainty as surging oil prices and escalating tensions in the Middle East disrupt global energy markets. Pakistan remains particularly vulnerable to rising oil costs, with crude approaching $120 per barrel, given the country’s heavy reliance on imported fuel that widens the current-account deficit and fuels inflation, currently running at about 7%.
Published on 2026-03-09

Pakistan Holds Policy Rate at 10.5%
The State Bank of Pakistan kept its benchmark policy rate at 10.5% in January, surprising markets that had expected a cut to 10% following two reductions last year. Headline inflation eased to a three-month low of 5.6% in December, remaining within the 5–7% target range, with the central bank projecting inflation to stay within this range through FY26 and FY27. Economic activity remained robust, with Q1-FY26 GDP rising 3.7% year-on-year, up from 1.6% in the same period last year, driven primarily by industrial and agricultural sectors. GDP growth for FY26 is projected at 3.75–4.75%. On the external front, the current account deficit widened, but steady workers’ remittances and resilient ICT exports helped contain pressures. FX reserves have been building and are expected to exceed $18 billion by FY26-end. The MPC noted the current rate supports price stability and growth, highlighting coordination with fiscal policy and structural reforms.
Published on 2026-01-26

Pakistan Central Bank Surprises with 50bps Rate Cut
The State Bank of Pakistan cut its benchmark policy rate by 50 basis points to 10.5% in December, marking the second rate cut this year and surprising market expectations, which had forecast no change. The move came shortly after the IMF approved a $1.2 billion disbursement, which strengthened Pakistan’s foreign exchange reserves and enabled the government to service its debt. The World Bank projects annual GDP growth at just 3% through June, below the central bank’s previous forecast of 3.25%-4.25%. Annual inflation eased slightly to 6.1% in November, though the central bank has warned that price growth is likely to remain above its 5%-7% target range beyond December.
Published on 2025-12-15

Pakistan Central Bank Surprises with 50bps Rate Cut
The State Bank of Pakistan cut its benchmark policy rate by 50 basis points to 10.5% in December, marking the second rate cut this year and surprising market expectations, which had forecast no change. The move followed the IMF’s approval of a $1.2 billion disbursement, which bolstered foreign exchange reserves to over $15.8 billion and enabled the government to service its debt. Inflation remained within the 5–7% target range between July and November FY26, supported by moderate global commodity prices and anchored expectations, though core inflation remains sticky. High-frequency indicators point to continued momentum in industry and agriculture, with large-scale manufacturing up 4.1% YoY in Q1-FY26 and wheat production expected to exceed targets. While exports face pressure amid global headwinds, robust FX reserves and improving fiscal balances provide room for policy support.
Published on 2025-12-15

Pakistan Holds Key Rate Steady for 4th Straight Meeting
The State Bank of Pakistan kept its benchmark policy rate unchanged at 11% in October, marking a fourth consecutive hold, citing a stronger macroeconomic outlook and a milder-than-expected impact from recent floods. Real GDP for 2026 has been revised upward to the upper half of the previously projected 3.25–4.25% range, underpinned by robust performance in agriculture and industry, rising domestic demand, and continued private-sector investment. Headline inflation rose to 5.6% in September, driven by flood-related crop losses and energy price pressures, but remains within the central bank’s 5–7% target range. Inflation is expected to temporarily breach the upper bound in the second half of FY26 before returning to target in FY27. Post-flood rehabilitation expenditures are likely to be financed through budgeted fiscal resources. The current account deficit is projected to stay within 0–1% of GDP, while foreign exchange reserves are expected to reach $15.5 billion by December 2025.
Published on 2025-10-27

Pakistan Holds Key Rate Steady for 4th Straight Meeting
The State Bank of Pakistan kept its benchmark policy rate steady at 11% in October, marking the fourth consecutive meeting without a change, as the Monetary Policy Committee deemed the stance appropriate to maintain price stability and support sustainable growth. Headline inflation surged to 5.6% year-on-year in September from 3.6% in August, driven by flood-related crop damage, yet remained within the central bank’s 5–7% target range. Potential effects from recent border disruptions with Afghanistan are expected to be reflected in upcoming inflation readings. For FY2025, real GDP is projected to expand 3.25–4.25%, underpinned by stable to positive growth in key sectors, rising domestic demand, and continued private investment and infrastructure projects. Banking sector liquidity saw moderate expansion, with M2 and private sector credit increasing steadily.
Published on 2025-10-27

Pakistan Holds Key Rate Steady for 4th Straight Meeting
The State Bank of Pakistan held its benchmark policy rate at 11% in October, marking the fourth consecutive meeting to leave rates unchanged.
Published on 2025-10-27

Pakistan Keeps Policy Rate at 11% Amid Flood Concerns
The State Bank of Pakistan held its benchmark policy rate at 11% in September, marking the second consecutive decision to leave rates unchanged and in line with market expectations. Recent floods have devastated farmland in Punjab, disrupting supply chains, pushing up prices for wheat, rice, and vegetables, and prompting manufacturers to raise selling prices due to higher fuel and transportation costs and delays in input deliveries. Headline inflation eased to 3.0% in August, below the central bank’s 5-7% target range, but potential risks from rising food prices and crop losses from extreme weather could limit further easing of inflation pressures. On the GDP front, agricultural losses may weigh on growth, although reconstruction efforts could partially offset the impact. Given these uncertainties, policymakers are maintaining rates to balance inflation risks and economic stability.
Published on 2025-09-15

Pakistan Central Bank Holds Policy Rate at 11%, Defying Expectations
The State Bank of Pakistan left its benchmark policy rate unchanged at 11% in July, maintaining borrowing costs at their lowest level since March 2022. The decision surprised markets, which had widely expected another cut, given the continued moderation in inflation and increasing calls to support economic growth. Consumer price inflation eased to 3.2% in June, down from 3.5% in May, aligning with the government’s projected range of 3% to 4%. For the fiscal year ending June 30, average inflation fell to a nine-year low of 4.49%, a sharp decline from 23.4% the previous year. However, the SBP signaled caution amid rising imports and renewed pressure on the currency, which could reignite inflationary risks. The central bank began its easing cycle in June 2024, cutting rates from a record 22%. After a brief pause in March 2025 following a series of 10 bps cuts, the SBP resumed easing with a 100 bps cut in May, but held steady again in June amid tensions between Iran and Israel.
Published on 2025-07-30

Pakistan Holds Key Rate Steady at 11%
The central bank of Pakistan kept its key interest rate steady at 11% during its June meeting, in line with expectations, after a surprise 100 bps cut in its May meeting. The decision came amid the ongoing conflict between Israel and Iran, and volatile global oil prices, which have added upside risks to inflation. The bank’s Monetary Policy Committee (MPC) said in a statement announcing the decision that it expected some near-term volatility in inflation, which is projected to gradually edge up and stabilize within the 5–7% target range. “This outlook, however, remains subject to multiple risks emanating from potential supply-chain disruptions from regional geopolitical conflicts, volatility in oil and other commodity prices, and the timing and magnitude of domestic energy price adjustments,” the MPC said. Headline inflation rose to a five-month high of 3.5% in May, up from a near six-decade low of 0.3% in April, exceeding the finance ministry’s projection of 1.5%–2%.
Published on 2025-06-17

Pakistan Unexpectedly Lowers Interest Rate
The State Bank of Pakistan cut its key policy rate by 100 bps to 11% at its May meeting, surprising markets that had expected the rate to remain unchanged at 12%. This marks the first rate cut of the year, resuming the easing cycle after a brief pause in March and bringing borrowing costs down from a record high of 22%. The decision comes amid heightened tensions with neighboring India following a deadly attack on tourists in Indian-administered Kashmir. Inflation continued its downward trend, easing for the sixth consecutive month to just 0.3% in April—the lowest rate since August 1968—driven largely by reduced electricity tariffs and sustained declines in food prices. On the growth front, real GDP grew by an estimated 1.7% year-on-year in Q2 FY25, while Q1 growth was revised upward to 1.3% from a previous estimate of 0.9%. Policymakers pledged to maintain a cautious approach to monetary policy amid persistent global uncertainty driven by trade tensions and geopolitical risks.
Published on 2025-05-05

Pakistan Pauses Rate Cuts Despite Falling Inflation
The State Bank of Pakistan unexpectedly held its key policy rate at 12% during its March meeting, pausing an easing cycle that had delivered six consecutive rate cuts since June. Policymakers have already slashed interest rates by 1,000 basis points from a record-high 22% in June 2024 to support economic growth, stating that the current stance is sufficient to maintain macroeconomic stability. At its previous policy meeting, the central bank reaffirmed its full-year GDP growth forecast of 2.5%–3.5%. Meanwhile, Pakistan’s leading trade and industry body recently urged a 500-basis-point rate cut, arguing that businesses remain dissatisfied with monetary policy and view interest rates as excessively high, despite inflation reaching a nine-year low. In February, the country's inflation rate fell to 1.5%, well below the government's projections and a sharp decline from the multi-decade high of around 40% recorded in May 2023.
Published on 2025-03-10

Pakistan Trims Key Rate For 6th Time, as Forecast
The State Bank of Pakistan slashed its key policy rate by 100 bps to 12% during its January 2025 meeting, the lowest level since March 2022, matching market expectations. This marks the sixth consecutive rate reduction, intended to stimulate the economy as inflation subsides. Pakistan's annual inflation rate eased further to 4.1% in December 2024, marking the lowest reading since April 2018, down November's 4.9%, and it is expected to come down again in January. The core rate remains elevated but dropped to 8.1% in December, the lowest level since February 2022. Meanwhile, the economy rose by 0.92% in the first quarter of the fiscal year 2024/25, according to data released by the Statistics Bureau. The central bank maintained its full-year GDP growth at 2.5%-3.5%.
Published on 2025-01-27

Pakistan Cuts Interest Rates For 5th Time
The State Bank of Pakistan reduced its key policy rate by 200bps to 13% during its December 2024 meeting, in line with market expectations. This marks the fifth consecutive rate cut this year, bringing borrowing costs to their lowest level since April 2022. The move is aimed at balancing inflationary and external account pressures while fostering sustainable economic growth. Pakistan's inflation rate fell to 4.9% in November, the lowest since April 2018, driven by a continued decline in food prices and the waning impact of gas tariff hikes from November 2023. However, core inflation remained elevated at 9.7%. Policymakers also noted a modest improvement in the country’s growth outlook.
Published on 2024-12-16

Pakistan Cuts Interest Rate More Than Expected to 15%
The Central Bank of Pakistan cut its policy rate by 250 basis points to 15% in its November 4th meeting, surpassing market expectations of a 200 basis point cut, following a previous 200 basis point reduction in September. The decision reflects a sharper than anticipated decline in inflation, which dropped to 6.9% in September and 7.2% in October, from 9.6% in August. The Monetary Policy Committee (MPC) now projects FY25 average inflation to fall below the prior forecast range of 11.5-13.5%. Moreover, positive developments, including IMF Board approval of a new EFF program, and an uptick in foreign investment, bolstered Pakistan’s FX reserves to $11.2 billion. The MPC now anticipates that real GDP growth in FY25 will surpass its previous forecast but remain within the 2.5% to 3.5% range.
Published on 2024-11-04

Pakistan Cuts Interest Rate More Than Expected to 17.5%
The Central Bank of Pakistan cut its policy rate by 200 basis points to 17.5% during its September 12th meeting, exceeding market expectations of a 150bps cut, following a 100bps cut in July, as both headline and core inflation dropped sharply in recent months. Inflation eased to 9.6% in August 2024, down from 12.6% in June, driven by delayed application of administered energy price hikes and favorable global oil and food prices. Despite this, inflation risks remain due to volatile global commodity prices, potential energy price adjustments, and tax measures. The central bank expects FY25 inflation to fall below its previous forecast of 11.5–13.5%, contingent on fiscal consolidation and external inflows. Additionally, FX reserves stood at around $9.5 billion in early September, despite weak official FX inflows and ongoing debt repayments. As for economic growth, The GDP growth outlook for FY25 remains at 2.5–3.5%.
Published on 2024-09-12

Pakistan Cuts Interest Rate Further to 19.5%
The central bank of Pakistan lowered its policy rate by 100bps to 19.5% in its July 29th 2024 meeting, in line with market forecasts, following a 150bps cut last June. The decision followed better-than-expected inflation rates for June 2024 and improvements in the external account, with FX reserves rising despite ongoing debt repayments. Headline inflation in June 2024 rose to 12.6% from 11.8% in May, primarily due to higher electricity tariffs and Eid-related price increases as expected. Despite the rate cut, the MPC believes the policy stance is still sufficiently tight to achieve a medium-term inflation target of 5-7%, dependent on fiscal consolidation and structural reforms. Moreover, economic activity showed moderate improvement, with FY25 GDP growth projected at 2.5-3.5%. Additionally, Pakistan secured a staff-level agreement with the IMF for a 37-month Extended Fund Facility (EFF) program valued at about $7.0 billion, aimed at supporting economic stability and reform efforts.
Published on 2024-07-29

Pakistan Cuts Rates for 1st Time in 4 Years
The central bank of Pakistan lowered its keep policy rate by 150bps to 20.5% in its June 10th 2024 meeting, the first reduction in borrowing costs since mid-2020, and compared to market forecasts of a smaller 100bps cut. Policymakers cited a better-than-expected inflation reading for May and subsiding inflationary pressures amid tight monetary policy and fiscal consolidation. Inflation rate in Pakistan eased for the fifth consecutive month to 11.8% in May, the lowest since November 2021, from 17.3% in April. The central bank expects growth for the FY24 that starts on July 1st at 2.4%. The government recently target a growth rate of 3.6% , while inflation was likely to moderate to 12%.
Published on 2024-06-10