SBP Keeps Policy Rate Unchanged at 12% Amid Economic Uncertainty

KARACHI, 10 March 2025 – The State Bank of Pakistan (SBP) Monetary Policy Committee (MPC) decided to keep the policy rate stable at 12% on Monday, defying expectations of a 50-100 basis point cut.

In its meeting today, the MPC confirmed that the interest rate would remain unchanged for the next one and a half months. The SBP noted that inflation in February stood at 1.5% and is expected to decrease further before rising gradually again. For the current fiscal year, inflation is projected to stay between 5% and 7%, although risks remain due to fluctuating food prices, energy adjustments, additional taxes, and global commodity price movements.

Looking ahead, the SBP anticipates a surplus in the current account balance for fiscal year 2024-25, with the GDP deficit estimated at around 0.5%. The central bank also projected that its foreign reserves would surpass $13 billion by June 2025. The SBP emphasized the importance of strengthening external buffers amid global economic uncertainty, with the expectation of improved financial conditions in the second half of FY25, leading to a recovery in economic growth.

The central bank maintained its growth forecast at 2.5% to 3.5% for the current fiscal year, with an expected acceleration in economic activities as financial conditions stabilize.

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Notably, in the previous review, the SBP had reduced the policy rate by 1%, bringing it down to the current 12% level.