The Monetary Policy committee (MPC) of the State Bank of Pakistan (SBP) in its meeting held on Monday, has decided to keep the policy rate unchanged at 12%.
The committee highlighted that inflation in February 2025 was lower than anticipated, primarily due to a decline in food and energy prices. However, it acknowledged the risks associated with the volatility of these prices, which could disrupt the ongoing downward trend in inflation. Additionally, core inflation remains persistently high, raising concerns that any resurgence in food and energy costs could reignite inflationary pressures.
Economic activity continues to strengthen, as evidenced by key high-frequency indicators. However, the MPC noted emerging pressures on the external account, driven by rising imports and weak financial inflows.
Despite these challenges, the committee assessed that the current real interest rate remains sufficiently positive on a forward-looking basis to support macroeconomic stability.
In its previous meeting on January 27, the MPC had reduced the policy rate by 100 basis points to the current 12%.
