SBP holds policy rate at 10.5% despite rising regional risks
“The SBP has kept the benchmark interest rate unchanged at 10.5 percent, citing elevated uncertainty from regional conflict but manageable macroeconomic conditions.”
Key points
- The SBP has kept the benchmark interest rate unchanged at 10.5 percent, citing elevated uncertainty from regional conflict but manageable macroeconomic conditions.
- The central bank said inflation risks have increased, though its broader FY26 outlook remains within earlier projections.
The State Bank of Pakistan left its policy rate unchanged at 10.5 percent after its Monetary Policy Committee meeting, saying heightened regional tensions have increased uncertainty but do not yet warrant a change in rates. The central bank said the conflict in the Middle East has pushed up fuel, freight and insurance costs and could affect trade and travel flows.
The MPC noted that inflation has moved higher in recent months, while foreign exchange reserves and other macroeconomic buffers are stronger than in earlier external shocks. It said its initial assessment still places the outlook for key economic indicators within previously projected ranges for FY26, though risks have risen markedly.
The central bank also highlighted improving economic activity, a January current account surplus, and continued reserve accumulation, while warning that tax collection remains below target and international commodity prices remain volatile. It said maintaining price stability and accelerating structural reforms remain critical in the current environment.
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