The State Bank of Pakistan (SBP) on Monday maintained its key policy rate at 10.5 per cent.
The announcement was posted on the central bank’s X account. A formal statement by the Monetary Policy Committee is awaited.
Analysts had widely expected the policy rate to remain unchanged, with Topline Securities noting that the decision was in line with their expectations.
A
Reuters
poll
conducted earlier this month also indicated a consensus for a hold, as rising global energy prices and escalating regional tensions cloud the inflation outlook and limit the central bank’s room for further cuts.
The State Bank has cut the key rate by a cumulative 1,150 basis points since mid-2024, from a
record 22pc
in 2023, as inflation cooled sharply from multi-decade highs.
Pakistan has begun to
feel the economic fallout
of the escalating conflict between the US-Israel against Iran, which has led to the
closure of the Strait of Hormuz
and triggered a sharp rise in global fuel prices.
In international markets, Brent crude is on track for a
record one-day gain
, as mounting geopolitical tensions place severe pressure on global energy supplies. Meanwhile,
gold fell 2pc
.
Pakistan imports most of its energy needs, making domestic inflation sensitive to changes in global fuel prices.
Last week, the government also
raised the prices of petrol and high-speed diesel
by Rs55 per litre, the largest single increase on record, as the country began absorbing the first direct economic shocks of the ongoing regional conflict.
The country is also in an ongoing $7 billion International Monetary Fund (IMF) programme, with the Fund urging policymakers to keep monetary policy tight and data-dependent to anchor inflation expectations and strengthen external buffers.
Additional input from Reuters
— Source: Dawn (https://www.dawn.com/news/1980133/sbp-maintains-policy-rate-at-105pc)
