State Bank of Pakistan Keeps Interest Rate Steady Amid Flood Concerns

Karachi: The State Bank of Pakistan (SBP) has decided to maintain its policy rate at 11%, citing a weakened macroeconomic outlook due to ongoing floods. The bank’s Monetary Policy Committee (MPC) views this decision as crucial for ensuring price stability.

The SBP anticipates an increase in foreign exchange reserves in the near future. Additionally, it expects workers’ remittances to reach $40 billion by the fiscal year 2026. The MPC also projects that external financing needs for the same period will be similar to those of last year.

For fiscal year 2026, the MPC estimates that the current account deficit will remain between 0% and 1% of the Gross Domestic Product (GDP). The committee emphasizes that sustained economic growth will necessitate structural reforms and the continuation of prudent monetary and fiscal policies.

These projections and policy decisions come as the nation grapples with the economic implications of severe flooding, which has impacted various sectors and prompted the need for cautious economic measures.