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SBP Keeps Policy Rate Unchanged at 11% Amid Inflation Concerns and Post-Flood Recovery
The State Bank of Pakistan has maintained its policy rate at 11%, citing inflationary pressures from food and energy prices and ongoing flood recovery efforts. While challenges remain, the SBP sees signs of stability — improved reserves, steady growth indicators, and easing inflation expectations.
ND
by News Desk
2025-10-27
SBP Keeps Policy Rate Unchanged at 11% Amid Inflation Concerns and Post-Flood Recovery

Karachi, October 27, 2025 — The State Bank of Pakistan (SBP) has decided to maintain the key policy rate at 11%, as the Monetary Policy Committee (MPC) weighed the effects of recent floods, food price volatility, and global economic uncertainties.

In its monetary policy statement, the SBP noted that headline inflation rose to 5.6% in September, driven by higher food and energy prices, while core inflation remained steady at 7.3%. The bank attributed the price surge largely to flood-related disruptions and global commodity volatility.

Despite these pressures, the MPC observed that the economic impact of the floods was milder than initially expected, with supply disruptions remaining limited and major kharif crops performing close to last year’s levels.

The SBP also highlighted several positive developments, including the continued buildup of foreign exchange reserves, IMF staff-level agreements, and easing inflation expectations among businesses and consumers.

The committee reiterated the need for coordinated fiscal and monetary policies and emphasized that the current real policy rate remains adequately positive to stabilize inflation within the target range of 5–7% over the medium term.

Analysts noted that the decision aligns with market expectations, given the recent floods in Punjab and Khyber Pakhtunkhwa and the persistent risk of rising inflation. Despite subdued private-sector credit demand and sluggish growth, the SBP has prioritized price stability and macroeconomic balance.

The policy rate has remained unchanged since May 2025, reflecting the central bank’s cautious stance amid a delicate recovery phase for Pakistan’s economy.
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