KARACHI (Web Desk) – The State Bank of Pakistan (SBP) will hold a meeting of its Monetary Policy Committee (MPC) today (Monday) in Karachi to decide the interest rate.
A majority of analysts and surveys conducted by leading brokerage houses anticipate no change in the policy rate. Headline inflation has shown an upward trend in recent months, increasing from 4.1% in July to 6.1% in November, largely driven by disruptions in food supply following recent floods.
After cutting interest rates by a cumulative 1,100 basis points since June 2024, the central bank has kept the policy rate unchanged at 11% for the last four consecutive meetings. The most recent rate cut was announced in May this year.
Analysts also highlighted the central bank’s focus on maintaining positive real interest rates.
“Keeping the rate unchanged supports positive real returns and aligns with IMF-backed policy discipline, especially when external buffers remain fragile,” said an analyst.
In its latest staff report, the International Monetary Fund urged Pakistan to keep monetary policy sufficiently tight and data-driven to ensure inflation remains within the SBP’s target range.
The IMF noted that the central bank’s cautious approach has helped manage inflation risks despite volatile conditions and temporary declines in headline inflation.
The IMF also advised the SBP to closely monitor the impact of recent floods on inflation and the external account and remain ready to take decisive action to keep inflation expectations well anchored.
Gohar Ejaz, another prominent industrialist and former caretaker Federal Minister for Commerce, echoed similar sentiments.
“Over the last 36 months, we have attempted to stabilise the economy but achieved less than 2% aggregate growth,” he wrote on X.
“During the same period, the exchange rate has deteriorated from Rs160 to Rs280 per US dollar, and exports have remained stuck at around $30 billion, which clearly shows that devaluation is not the solution to make exports competitive,” he noted.
Gohar highlighted that Pakistan’s interest rates are nearly twice as high as those in regional economies, including China and India.
“Pakistan’s Monetary Policy Committee has kept the policy rate at 11% since the beginning of the year—reducing it by only one percentage point in the last 12 months—resulting in average real interest rates above 6%.
“This is eroding industrial competitiveness, suppressing growth, and keeping the economy on a ventilator with no export expansion,” he said.
Gohar called for reducing interest rates to around 6%, and bringing real interest rates down to 1%, in line with regional benchmarks, over the next six months.
“This will also reduce government debt servicing by Rs3 trillion per year,” he said.
