Pakistan's Central Bank Holds Key Interest Rate at 11.5%
The State Bank of Pakistan's (SBP) Monetary Policy Committee (MPC) decided on Monday to maintain the key interest rate at 11.5 percent. SBP Governor Jameel Ahmed announced the decision during a press conference. This move aligns with expectations from analysts and a significant majority of market stakeholders, with over 90 percent anticipating the rate would remain unchanged. Concerns about maintaining macroeconomic stability amidst sluggish economic growth influenced this decision. Previously, the SBP had reduced the policy rate by 50 basis points to 10.5 percent in December 2025, followed by an increase of 100 basis points to the current 11.5 percent in April of this year. Despite ongoing calls from the business community for a significant rate cut to stimulate economic activity, the central bank has held the rate steady.
The State Bank of Pakistan's decision to maintain its policy rate at 11.5% reflects a cautious approach to balancing inflation control with economic growth. By keeping the rate unchanged, the SBP signals a priority on macroeconomic stability, potentially viewing further rate cuts as a risk to price stability given current economic conditions. This stance may create tension with the business community, which advocates for lower borrowing costs to spur investment and activity. Future monetary policy decisions will likely depend on evolving inflation trends, global economic factors, and the government's fiscal management, presenting a complex trade-off between short-term economic stimulus and long-term financial resilience in an increasingly uncertain global landscape.
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