Monetary Policy remains under pressure as inflation, liquidity demand, and external uncertainty continue to affect Pakistan’s economic outlook. The Institute of Cost and Management Accountants of Pakistan released the 24th edition of its Monetary Policy Statement Review after the State Bank of Pakistan decided to maintain the policy rate at 11.50 percent on June 15, 2026.
According to the review, the decision reflects a cautious approach to changing economic conditions. ICMA indicated that inflation trends, exchange-rate sensitivity, and uncertainty linked to regional developments influenced the decision to keep rates unchanged.
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ICMA Review Examines Monetary Policy
ICMA stated that headline inflation accelerated to 10.9 percent in April 2026 and increased further to 11.7 percent in May 2026. At the same time, core inflation also moved higher, suggesting that supply-side and energy-related pressures are extending into broader pricing trends.
Using its Monetary Policy Effectiveness Gap framework, known as MPEG, the institute reported that current inflation and liquidity conditions are moving faster than earlier policy-rate signals.
As a result, the review suggested that reducing rates at this stage could increase inflationary pressure.
ICMA Supports Stable Policy Rate
The review noted that maintaining the current policy rate remains the preferred short-term approach. However, ICMA emphasized that monetary policy alone cannot deliver long-term economic stability.
The institute recommended complementary reforms including stronger fiscal discipline, expansion of the tax base, reforms in the energy sector, and greater financial inclusion.
Furthermore, the report stated that improving institutional coordination could strengthen the impact of future policy actions and increase overall policy credibility.
ICMA Cites Economic Indicators
According to the review, provisional GDP growth for FY26 was estimated at 3.7 percent. Meanwhile, State Bank foreign exchange reserves reached 17.2 billion dollars by June 5, 2026 and are projected to approach 18 billion dollars by the end of June.
ICMA also highlighted the importance of maintaining fiscal discipline. The reported primary balance surplus of 2.5 percent of GDP in FY26 and the 2.0 percent target for FY27 were described as important for easing pressure on monetary decisions.
These indicators, according to the review, support a balanced and measured policy approach.
ICMA Recommends Broader Economic Coordination
ICMA recommended maintaining a cautious monetary stance while strengthening liquidity monitoring during periods of elevated cash demand, including Eid and Muharram.
Additionally, the institute called for closer coordination between monetary and fiscal authorities. It also recommended targeted supply-side support in energy, transport, and production sectors.
The review further proposed institutionalizing the MPEG framework as a monthly monitoring tool to improve economic assessment and policy responsiveness.
