WEBDESK: The State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) has decided to keep the key policy rate unchanged at 11 per cent, citing flood-related uncertainty and the need to maintain price stability.
The decision was made at the MPC’s meeting held on Monday. The committee noted that inflation remained relatively moderate in July and August, while core inflation continued to decline, though at a slower pace.
Economic activity, reflected by large-scale manufacturing and other high-frequency indicators, has picked up momentum. However, the central bank warned that the recent floods pose risks to the short-term economic outlook.
According to the MPC, flood damage to the crop sector could temporarily push up headline inflation and widen the current account deficit in FY26. Economic growth is also expected to moderate compared to earlier forecasts.
Despite these risks, the SBP stressed that the economy is better placed to absorb shocks than in past flood events. Low inflation, moderate domestic demand, stable foreign exchange reserves, and a relatively calm global commodity market have all helped strengthen the economy.
The MPC also pointed out that external and fiscal buffers built up in the last two years through coordinated monetary and fiscal policies should continue to support resilience and long-term sustainable growth.
Monetary Policy Committee has announced its policy decision. Please visit: https://t.co/8TgI0anHiP
— SBP (@StateBank_Pak) September 15, 2025
Among other developments, the SBP highlighted stable FX reserves despite debt repayments and a current account deficit, a slight shortfall in FBR tax collection for July–August, and a modest rise in inflation expectations from both consumers and businesses. The recent changes in US import tariffs, the committee noted, have eased global trade uncertainty to some extent.
The MPC concluded that the real policy rate remains positive enough to stabilise inflation within the medium-term target range of 5–7 per cent, despite possible short-term volatility.
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