MPC Holds Firm at 11% Rate Amid Inflation Concerns

Karachi: The State Bank of Pakistan (SBP) decided to maintain the policy rate at 11%, defying widespread market expectations for a cut. The Monetary Policy Committee (MPC) emphasized that the decision was critical to address the challenges posed by rising import levels and potential inflationary pressures stemming from increased energy costs, particularly gas tariffs.

The SBP highlighted the importance of this monetary stance to preserve macroeconomic stability. As part of its economic outlook, the central bank projected a significant boost in foreign exchange reserves, alongside an expectation that workers’ remittances will exceed $40 billion by the fiscal year 2026.

In terms of economic growth, the MPC forecasts a GDP growth rate ranging from 3.25% to 4.25% for the fiscal year 2026. The committee also anticipates the current account to remain between 0% and 1% of GDP during the same period.

The MPC underscored the necessity of structural reforms to ensure sustained economic growth. It called for a continuation of prudent monetary and fiscal policies to support these objectives, indicating that stability in these areas is essential for future economic progress.