Pakistan Central Bank Keeps Interest Rate Steady at 11% Amid Inflation Concerns
The State Bank of Pakistan (SBP) has decided to keep its policy rate steady at 11%. The decision, made by the Monetary Policy Committee (MPC) on Monday, came as no surprise to market analysts.
In its official statement, the MPC confirmed, “The committee decided to keep the policy rate unchanged at 11%.”
Headline inflation rose sharply to 5.6% in September, while core inflation stayed firm at 7.3%. This rise in inflation led the central bank to maintain its cautious stance.
Analysts Support the Decision
Analysts from Arif Habib Limited (AHL) had expected no change. They linked this to higher inflation, a slightly wider current account deficit, and early signs of domestic recovery.
AHL also pointed out that Pakistan’s economic momentum is improving. Large scale manufacturing grew by 9% year-on-year in July. However, the SBP chose stability over short term stimulus. According to AHL, “The central bank prefers to let economic stability support ongoing recovery rather than rushing into rate cuts.”
Similarly, Topline Securities analysts agreed. They noted that flood related inflation and growing import activity were key reasons for holding rates steady.
Outlook for the Coming Months
Topline expects the central bank to maintain its stance through most of FY26. Inflation could climb to 8-9% in the second half before easing to 6-7%.
Despite higher interest rates, oil imports are rising. Analysts say this trend supports the SBP’s decision to stay cautious. A stable policy rate, they believe, will help manage inflation while keeping growth consistent.
A Reuters poll echoed these views. Analysts in the survey said that flood driven food inflation and a low base effect limited the scope for monetary easing.
Fawad Basir, Head of Research at KTrade, added, “The next rate cut may not come until July 2026, as the MPC will likely wait for inflation to ease.”
Earlier, SBP Governor Jameel Ahmad told Bloomberg that any future rate cuts would depend on flood recovery and the IMF’s policy review.
