KARACHI: Pakistan’s central bank kept its key policy rate unchanged at 10.5 percent on Monday, pausing its easing cycle as rising global energy prices and regional tensions pose new inflation risks for the import-dependent economy.
“The Monetary Policy Committee has decided to keep the policy rate unchanged at 10.5 percent,” the State Bank of Pakistan (SBP) said on its website, adding that a detailed statement would be released soon.
The SBP has cut the key rate by a cumulative 1,150 basis points since mid-2024, from a record 22 percent in 2023, as inflation cooled sharply from multi-decade highs.
Escalating tensions in the Middle East have raised concerns about disruption to shipping through the Strait of Hormuz, a key artery for global oil supplies, pushing energy prices higher.
Pakistan imports most of its energy needs, making domestic inflation sensitive to changes in global fuel prices.
On Friday, it raised consumer prices for diesel and petrol about 20 percent, citing higher oil prices driven by conflict in Iran.
Governor Jameel Ahmad has previously said the economy could grow 3.75 percent–4.75 percent in FY26, supported by stronger domestic demand and earlier monetary easing, while inflation may temporarily exceed the central bank’s 5 percent–7 percent target range this year before easing.
Pakistan is in an ongoing $7 billion IMF program, with the Fund urging policymakers to keep monetary policy tight and data-dependent to anchor inflation expectations and strengthen external buffers.
