The State Bank of Pakistan (SBP) announced its latest SBP monetary policy decision, keeping the policy rate unchanged at 11% on June 16, 2025. The Monetary Policy Committee (MPC) noted that inflation rose to 3.5% in May, in line with expectations, while core inflation slightly declined. Inflation expectations among households and businesses have moderated. Inflation is projected to rise in the near term but remain within the 5-7% target range in FY26.
The MPC observed that economic growth is gradually recovering and is expected to gain momentum next year due to the lagged impact of earlier rate cuts. However, it highlighted external sector risks, including a widening trade deficit, weak financial inflows, and potential import increases linked to FY26 budgetary measures.
Key developments since the last meeting include a provisional GDP growth estimate of 2.7% for FY25, with a 4.2% growth target for FY26. Despite the trade deficit widening, the current account remained balanced in April, aided by strong remittances. The central bank’s foreign exchange reserves rose to $11.7 billion as of June 6, following disbursement from an IMF program. The primary budget surplus for FY25 is estimated at 2.2% of GDP, with a 2.4% target for next year.
On the real sector, GDP growth accelerated to 3.9% in H2-FY25. Industry and services led the growth, while agriculture lagged. The external sector recorded a cumulative current account surplus of $1.9 billion for July-April FY25, but a moderate deficit is expected in FY26.
Broad money growth slowed to 12.6%, and private sector credit grew around 11%. Inflation rose in May due to base effects but is expected to stabilize. The SBP stressed timely reforms, fiscal discipline, and securing foreign inflows to maintain macroeconomic stability.
 announced its latest SBP monetary policy decision, keeping the policy rate unchanged at 11% on June 16, 2025. The Monetary Policy Committee (MPC) noted that inflation rose to 3.5% in May, in line with expectations, while core inflation slightly declined. Inflation expectations among households and businesses have moderated. Inflation is projected to rise in the near term but remain within the 5-7% target range in FY26.){kind=link}