This marks the fourth straight MPC meeting where the central bank has extended a pause in monetary easing
\n ISLAMABAD
\nThe Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) on Monday announced its decision to maintain the existing policy rate unchanged at 11%. This marks the fourth straight MPC meeting where the central bank has extended a pause in monetary easing as policymakers weighed inflation risks from flood damage against a fragile economic recovery.
\nThe policy committee had reduced the interest rate by 1 percentage point to 11% in its meeting on May 5 this year. The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) on Monday announced its decision to maintain the existing policy rate unchanged at 11%. This marks the fourth straight MPC meeting where the central bank has extended a pause in monetary easing as policymakers weighed inflation risks from flood damage against a fragile economic recovery.
\nThe policy committee had reduced the interest rate by 1 percentage point to 11% in its meeting on May 5 this year. Analysts had told Reuters that flood-driven food inflation and a low base effect are likely to limit the scope for further monetary easing. All 10 analysts surveyed in a Reuters poll expected the SBP to keep the policy rate unchanged, extending its pause as recent floods ravaged farmland and border closures with Afghanistan drove up prices of staples like tomatoes and apples.
\n\u201cAn elevated inflation reading in September, incorporating the impact of the recent floods, is likely to incline the MPC to keep the policy rate at the same level,\u201d said Fawad Basir, head of research at KTrade, adding that the next cut was likely in the last quarter of FY26, starting July 2026. Since October 11, border closures with Afghanistan following clashes have disrupted trade and deepened food shortages, intensifying inflationary pressures.
\nThe SBP last held rates in September, warning floods could push inflation above its 5%\u20137% target. Pakistan\u2019s headline inflation rate accelerated to 5.6% on a year-on-year basis, up 2% from the previous month. Floods, in August, swamped Punjab\u2019s farmland and industrial hubs, killing more than 1,000 people, displacing 2.5 million and damaging crops and factories.
\nThe central bank has room to stay on hold as real interest rates remain comfortably positive after inflation eased earlier this year, analysts said. \u201cWhile receding flood risks and lower global oil prices have improved the near-term inflation outlook, last year\u2019s low base is expected to push monthly readings higher,\u201d said Amreen Soorani of Al Meezan Investments.
\n\u201cGiven the central bank\u2019s preference to keep a real interest margin of around 300 basis points, there is little room for a rate cut,\u201d she added. The central bank has lowered rates by 1,100 basis points since June 2024, when they peaked at 22% after inflation neared 40% the year before. Its last 100-bps cut came in May, followed by holds in June, July, and September amid uncertainty over energy and food prices. <\/p>\n","protected":false},"excerpt":{"rendered":"
This marks the fourth straight MPC meeting where the central bank has extended a pause in monetary easing ISLAMABAD The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) on Monday announced its decision to maintain the existing policy rate unchanged at 11%. This marks the fourth straight MPC meeting where the central […]<\/p>\n","protected":false},"author":2,"featured_media":501587,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-511105","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"\n