Pakistan’s central bank holds key policy rate at 11.5%
Read a summary of this article on FAST.
Get bite-sized news via a new
cards interface. Give it a try.
Click here to return to FAST
Tap here to return to FAST
FAST
KARACHI, July 27 : Pakistan’s central bank held its key policy rate at 11.50 per cent on Monday, the bank’s governor told reporters, as U.S.-Iran hostilities threaten to push up energy costs and inflation in the import-dependent country.
The central bank decision comes weeks after the collapse of a ceasefire agreement between Washington and Tehran, with the two sides exchanging fire over control of the Strait of Hormuz, a critical corridor for global oil shipments.
State Bank of Pakistan (SBP) Governor Jameel Ahmad said there would likely be some reduction in inflation in July, adding that he hoped inflation will continue falling in the next two months if the conflict does not escalate.
The governor said a revised estimate for GDP growth in the fiscal year through June 2026 was likely to improve further, while the central bank expects growth in the following year within a range of 3.5 to 4.5 per cent, in line with earlier estimates.
Guess Word
Crack the word, one row at a time
Buzzword
Create words using the given letters
Mini Sudoku
Tiny puzzle, mighty brain teaser
Mini Crossword
Small grid, big challenge
Word Search
Spot as many words as you can
LOWER DEBT SERVICING COSTS
The SBP’s Monetary Policy Committee (MPC) cautioned in a statement that volatile commodity prices and potential impacts from the El Niño weather phenomenon could still influence outcomes.
The current-account deficit was expected to be “reasonable” because of growing remittances from Pakistanis working abroad, with a target of 0 per cent to 1 per cent of GDP, it said.
Ahmad said Islamabad owes $21.5 billion in debt repayments due in fiscal year 2027, most of which will be met through rollovers and refinancing. Debt servicing costs will be lower this year because interest payments have gone down, Ahmad said, adding that a change in debt sources had improved the country’s debt profile.
He said foreign exchange reserves reached around $17.3 billion by mid-July and will reach their earlier stated target of more than $20 billion by the year end.
Adnan Sheikh, vice president of research at the Pakistan Kuwait Investment Company, said: “The statement is modestly dovish but not enough to signal imminent rate cuts … It continues to prioritize price stability.”
AGGRESSIVE EASING
The MPC statement said it “re-emphasized the need of fiscal reforms, particularly tax base-broadening efforts and curtailing PSE (public sector enterprise) losses, to support high and sustainable economic growth”.
The SBP has raised the policy rate once this year, by 100 basis points to 11.5 per cent in April — its first increase in nearly three years — after holding rates steady since October 2025.
That move followed a cumulative 1,150 basis-point reduction from a record high of 22 per cent in June 2024, as the bank eased aggressively once inflation came under control.
Monday’s decision to hold the rate follows a similar decision to keep it at 11.5 per cent at the June meeting as well.
Source: Reuters
Sign up for our newsletters
Get the CNA app
Stay updated with notifications for breaking news and our best stories
Get WhatsApp alerts
Join our channel for the top reads for the day on your preferred chat app
Get bite-sized news via a new
cards interface. Give it a try.
Click here to return to FAST
Tap here to return to FAST
FAST
About The Author
