Karachi: The State Bank of Pakistan (SBP) maintained its policy rate at 11.0%, citing an improved economic outlook and the ongoing effects of previous rate reductions. The decision was announced today during a post-monetary policy statement briefing by the SBP Governor, who highlighted key factors influencing the decision.

The SBP's Monetary Policy Committee (MPC) noted an improved growth outlook, with real GDP growth now projected in the upper half of the 3.25% to 4.25% range. The impact of recent floods on the economy was less severe than expected, with crop losses contained and minimal supply disruptions.

Despite a milder-than-expected surge in food prices, inflation is anticipated to exceed the target range temporarily in the latter half of FY26. The SBP remains focused on remittances and other inflows to manage the current account deficit, expecting it to remain within 0-1% of GDP for FY26.

The central bank forecasts remittances to reach US$41 billion in FY26, up from US$38.3 billion in FY25. Foreign exchange reserves are expected to rise to US$17.8 billion by June 2026, while the SBP aims to reduce the currency-in-circulation to deposits ratio to 34% by 2028.

The SBP reported a 3.4% improvement in the primary balance as a percentage of GDP and a 6.95% decline in the debt-to-GDP ratio from FY23 to FY25. The bank continues to intervene in the market, with a focus on future interventions determined by import levels and other financial obligations.