The State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) maintained its key policy rate at 10.5 per cent on Monday.
During the last MPC meeting, the central bank revised its benchmark rate to 10.5 per cent, a 50-basis-point reduction, noting that inflation remained within the 5-7 per cent target range on average during July-November of the 2026 fiscal year, though it said core inflation proved relatively sticky.
Analysts expected another 50- to 100-basis-point reduction in the monetary policy rate today, bringing the rate to 9.5 or 10 per cent, owing to easing inflation, rising foreign exchange reserves, and a relatively stable rupee.
Ahead of the rate cut announcement, belief had been strengthened by the government’s reduction of cut-off yields across most tenors to single digits for the first time in four years on January 21.
Local businessmen were looking for a steeper decline in the interest rate to restore investor confidence in the economy.
During the last rate cut, the business community expressed their dismay at the 50 basis point cut, with the president of the Karachi Chamber of Commerce expressing that “such a token adjustment falls far short of what is urgently required to revive Pakistan’s fragile economy and restore business confidence.”
More to follow
