State Bank Maintains Policy Rate Amidst Flood Concerns**

Islamabad: The State Bank of Pakistan (SBP) has held its benchmark interest rate steady at 11% amidst the ongoing floods, a decision consistent with market anticipations. The Monetary Policy Committee (MPC), in its statement, acknowledged a slight worsening of the near-term economic outlook due to the floods, but maintained that the current rate is suitable for preserving price stability.

The SBP assesses the flood’s impact as less severe than previous floods, citing the nation’s improved economic resilience. While food prices are expected to experience a temporary increase, the central bank predicts a subsequent reversal in the coming months as post-flood yields boost supply.

Despite the flood-related challenges, the SBP forecasts that the current account deficit will stay within the projected range of 0-1% of GDP, with remittances potentially exceeding the US$40 billion target. Regarding external debt servicing, the SBP confirmed arrangements for the upcoming US$500 million Eurobond payment and assured that it will not affect reserve levels.

Although the SBP has already disbursed US$1.5 billion out of the net repayable amount of US$10 billion for FY26, the floods are anticipated to impact GDP growth. The SBP now projects growth to be on the lower end of the 3.25-4.25% range.

The SBP expressed confidence in its preparations for the scheduled IMF program review. The team is ready and has completed the necessary work for the upcoming assessment.