KARACHI: In its initial meeting of 2026, the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) opted to maintain the policy rate at 10.5 percent, signaling a decision rooted in stability amid evolving economic conditions.
The committee weighed several critical factors before arriving at this conclusion, including rising food prices and other significant economic metrics. Officials highlighted improvements in the nation’s foreign exchange reserves as a key factor contributing to a steadier economic outlook.
Beyond evaluating external economic trends, the MPC also deliberated on domestic financial and structural challenges, emphasizing the need for a balanced approach to monetary policy decisions while addressing inflationary pressures.
This decision reflects the central bank’s cautious strategy aimed at curbing inflation while safeguarding broader economic stability.
Prior reports had indicated that the State Bank was set to unveil its updated monetary policy following the MPC’s meeting held at its headquarters in Karachi earlier today.
However, market predictions had largely favored a reduction in the policy rate by 50 to 100 basis points, spurred by recent trends and signs of eased borrowing pressures.
During its final policy update of 2025, the SBP had reduced the rate by 50 basis points, bringing it to its current level. Since then, improved economic and financial indicators have bolstered anticipation of further monetary easing.
Particularly notable in recent months has been a sharp drop in government borrowing costs observed through Treasury bill auctions, with yields plummeting to single digits for the first time in four years—a development widely interpreted by analysts as a strong indicator suggesting more accommodative measures could be forthcoming.
