SBP maintains the basic rate of policy unchanged at 11%

• Inflation was slightly increased during May and June: Head of SBP.
• He says workers’ remittances are increasing by $ 8 billion.
• “Exports, remittances help to stabilize the current account.”

The Pakistani State Bank (SBP) decided to maintain the basic interest rate at 11%, amazing analysts waiting for another cut at the back of the cooling inflation and the need for further promotion of growth.

The decision was announced by SBP Governor Jameel Ahmed following the meeting of the Monetary Policy Committee (MPC).

Addressing a press conference in Karachi, the SBP chief said that while inflation remained at its lowest in April, it increased slightly during May and June, is largely driven by energy costs and the main result.

The commander noted that inflation could increase moderately in the coming months due to continuing pressure on energy prices.

On the outside front, he said that Pakistan’s exports increased by 4%, adding that exporting increased is essential for maintaining current transactions stability.

The governor also confirmed a significant increase in the remittances of workers, which increased by $ 8 billion and contributed to the current account of a surplus account.

Underlining macroeconomic stability, he said that the country fulfilled all its debt obligations in time and that foreign exchange reserves had increased by $ 5 billion even after $ 26 billion in external payments.

The agricultural sector, he said, also presents signs of recovery, which should support overall economic growth in the current financial year.

‘Structural Reforms’

According to a Central Bank’s statement, the MPC noted that inflation prospects have worsened somewhat after higher than expected adjustment of energy prices, in particular gas invoices.

“Nevertheless, inflation is projected to stabilize in the forward target range,” he said, adding that economic activity has gained further attraction in the midst of the level that continues to inhibit previous policy reductions.

At the same time, the statement said that the Commission noted that the trade deficit is expected to further expand FY26 amid the receipt of economic activity and the slowdown of world trade.

“Taking into account this macroeconomic perspective and emerging risks, the MPC has examined today’s decision as necessary to ensure prices stability,” he added.

The Commission also noted the key developments from its last meeting, saying that SBP’s foreign exchange reserves crossed $ 14 billion for the rear of improved financial inputs and a current transaction surplus.

Secondly, he said, Pakistan’s recent upgrade led to a reduction in Eurobond yields and reduced the CDs to spread to international markets.

In addition, inflation expectations have increased slightly for consumers, but have declined for businesses in latest emotion research.

Finally, the statement said, global oil prices remained unstable, while metal prices increased. “At the same time, the impact of global commercial invoices remained uncertain, urging central banks to maintain their cautious monetary political stance,” he added.

“Taking into account these developments and potential risks, the Commission evaluated that the actual policy rate should still be sufficiently positive to stabilize inflation in the target area of 5% to 7%.

In addition, the Commission reiterated its view that without structural reforms it would be difficult to achieve greater growth on a sustainable basis.

The decision came as the government is promoting reforms under a $ 7 billion IMF program and a contraction budget to limit deficits.

In informing the economic perspective on Tuesday, the IMF reduced growth provision for the use ended in June 2026 to 3.6%, well below the government target of 4.2%.

The SBP kept the percentages in June after a 100 -point reduction with 100 bases in May repeating the relaxation after a March pause.

Since June 2024, it reduced the policy rate by 1,100 basis points from a 22% record as prices dropped.

In a Reuters poll this week, all 15 analysts said they expected that the SBP would facilitate, with nine forecasts for a 50 -ward cut, four predicting a deeper reduction in 100 bases and two that project a smaller 25 -basis cut.

Head inflation slowed at 3.2% in June and is projected to 3.5% -4.5% in July, within the range of 5.5% -7.5% of SBP for the financial year ended in June 2026.

The government says the economy has stabilized, but analysts warn that growth remains fragile and global changes in commodity prices could add pressure to prices and external balances.

– with additional entry from Reuters