State Bank keeps key policy rate unchanged at 11%

The State Bank of Pakistan (SBP) on Wednesday kept its key interest rate unchanged at 11 per cent.

The decision to keep the rate unchanged came as a surprise for economists who expected another rate cut amidst easing inflation and the need to support economic growth.

The decision to this effect was announced by SBP Governor Jameel Ahmed after a meeting of the Monetary Policy Committee (MPC).

Since June 2024, the SBP has cut the policy rate by 1,000 basis points from a peak of 22 per cent to 11 per cent in seven intervals.

Also Read: Pakistan registers annual current account surplus after 14-years: SBP

Speaking to the media, the SBP governor said inflation, which was at its lowest in April, edged higher in May and June due to rising energy costs and base effects.

He warned that it could see a moderate rise in the coming months due to ongoing energy price pressures.

On the external front, the governor pointed to a 4 per cent increase in exports, stressing the need of export growth in sustaining current account stability.

He also highlighted a sharp rise in worker remittances, which grew by $8 billion and contributed to keeping the current account in surplus.

The SBC chief said that Pakistan had met all its debt obligations on time and that foreign exchange reserves had increased by $5 billion despite $26 billion in external payments, showing improved macroeconomic stability.