Karachi: The State Bank of Pakistan (SBP) on Monday decided to keep the policy rate unchanged at 12%.
The SBP cited lower-than-expected inflation and sustained economic recovery behind its decision to retain the policy rate.
The decision was announced after the Monetary Policy Committee (MPC) meeting today.
On the other hand the meeting also warned of potential risks posed by rising food and energy prices.
The SBP noted that economic activity was gaining momentum, but an increase in imports was exerting pressure on the current account.
Despite this, the SBP maintained a positive outlook, pointing to a surplus in the current account for the past six months and stabilizing foreign exchange reserves.
The SBP reported that inflation in February 2025 remained lower than anticipated, reinforcing its decision to hold the policy rate steady.
Governor Jameel Ahmad, addressing the press after the meeting, stated that “the ongoing current account surplus and declining inflation have created a favorable environment for economic stability.”
The current account surplus stood at $1.2 billion over the past six months, a sharp reversal from the $4.1 billion deficit recorded in the same period last year.
Foreign exchange reserves have also improved and are expected to exceed $13 billion by the end of June 2025.
The SBP projected GDP growth for the fiscal year to range between 2.5% and 3.5%, supported by increased oil consumption and a steady rise in economic activity.
However, agricultural growth remained sluggish, expanding by only 1% in the first quarter compared to 8% last year.
The MPC noted that while foreign exchange inflows had been lower than expected in the first half of the fiscal year, they were expected to pick up in the second half.
The governor reassured that external obligations were being met on time and that banks no longer required SBP permission for transactions.
Payments related to shipping and airlines were also being processed without delays, while imports, including oil, had shown improvement.
