By holding the policy rate at 11%, the State Bank of Pakistan (SBP) has maintained its cautious monetary stance, balancing moderate inflation and stabilization efforts with ongoing economic uncertainties.

While many in the business community push for a cut, the central bank appears to favour a measured approach as data unfolds.

SBP Governor Jameel Ahmad said inflation remained slightly below the 5–7% target range, reinforcing the committee’s decision to keep the policy rate unchanged at 11 percent.

Governor Ahmad noted that although inflation had remained slightly below the target range of 5 to 7 percent in recent months, upward pressure is beginning to build again. He attributed this to anticipated increases in energy prices and external risks.

“The Monetary Policy Committee reviewed the external account situation in detail and, considering the potential impact of energy price adjustments, decided to keep the policy rate unchanged,” Ahmad said.

He emphasized that maintaining the policy rate at the current level is aimed at anchoring inflation expectations and preserving macroeconomic stability.

The decision aligns with the SBP’s broader objective of containing inflation while supporting the ongoing economic recovery.

Speaking at a press conference on the monetary policy, the governor noted that inflation is beginning to rise again and some months may see rates exceeding the 5 to 7 percent target. However, he maintained that annual average inflation is expected to remain within the target band during the next fiscal year.

Governor Ahmed said Pakistan will be required to make $26 billion in external payments during the current fiscal year. Of this amount, $16 billion worth of loans are expected to be rolled over, bringing net payments down to $10 billion.

“Despite payments, our foreign exchange reserves have grown. Today, they stand at $14.5 billion,” he said, adding that all external payments for the previous year were made on time.

He also highlighted that Pakistan’s external debt has remained below $100 billion for the last three years and that the current account had recorded a surplus after 14 years, helped by a notable $8 billion increase in remittances over the past year, which are now expected to exceed $40 billion in the coming year.

On the economic front, the governor said growth stood at 2.7 percent last fiscal year and is projected to rise to between 3.25 and 4.25 percent in the upcoming year, with strong performance expected in the agriculture sector.

Exports rose by 4 percent but should have grown at a higher pace, while non-oil imports have started to increase, he added.

Ahmed also acknowledged that the current account, which recently turned surplus, may shift back into a deficit next year but is expected to remain within 0 to 1 percent of GDP.