SBP holds key interest rate percent at 11 per cent

KARACHI: The State Bank of Pakistan (SBP) has decided to keep its key interest rate at 11 per cent, citing today’s decision necessary to ensure price stability.

The SBP Governor Jameel Ahmed announced the decision during a press conference today, following the Monetary Policy Committee (MPC) meeting.

The statement issued the the Monetary Policy Committee (MPC) said that inflation in June 2025 decelerated to 3.2 percent y/y, led mainly by lower food prices, whereas core inflation also declined slightly.

“However, the Committee noted that the inflation outlook has somewhat worsened in the wake of higher than anticipated adjustment in energy prices, especially gas tariffs,” the statement read.

Furthermore, the MPC noted that going forward, energy inflation is expected to rise from current levels amidst the significant upward adjustment in gas tariffs.

The MPC statement added that inflation currently stands at 7.2% and could fluctuate between 5 and 7% during the current fiscal year.

Highlighting macroeconomic stability, the committee stated that the country met all its debt obligations on time and that foreign exchange reserves had increased by $5 billion even after making $26 billion in external payments.

The committee noted that the trade deficit is expected to widen further in FY26 amidst the pickup in economic activity and slowdown in global trade.

The MPC assessed that the real policy rate should continue to be adequately positive to stabilize inflation in the target range of 5 – 7 percent.

It emphasized the need to continue the ongoing prudent monetary and fiscal policy mix to sustain macroeconomic stability.

“Moreover, the Committee reiterated its view that without structural reforms it would be difficult to achieve higher growth on a sustainable basis,” the statement reads.