ISLAMABAD – The State Bank of Pakistan (SBP) announced that it will maintain the policy rate at 10.5 percent, citing ongoing global economic uncertainties and rising fuel and logistics costs.
The central bank highlighted that Pakistan’s inflation rose from 5.8 percent in January to 7 percent in February. This increase is putting pressure on both households and businesses across the country.
The State Bank reported that foreign exchange reserves improved to $16.3 billion as of February 27, reflecting stronger liquidity in the market. Large-scale manufacturing recorded modest growth of 0.4 percent in December 2025, while GDP growth for the first half of the fiscal year (July–December 2025–26) stood at 4.8 percent.
In January 2026, the current account showed a surplus of $121 million. Private sector credit increased by Rs790 billion as of February 20, indicating growing lending activity. The State Bank aims to increase foreign exchange reserves to $18 billion by the end of the fiscal year.
Analysts said the SBP’s decision reflects a cautious approach. While monetary policy remains tight, the central bank is trying to balance economic growth with inflationary pressures. Rising global energy costs and logistics challenges continue to affect the domestic economy.
The SBP also warned that inflation is likely to remain above 7 percent for the coming months of FY 2026. Policymakers will continue monitoring the impact of external shocks, domestic fiscal pressures, and global market volatility.
Experts say the State Bank’s careful stance aims to maintain economic stability without stifling growth. By keeping the policy rate unchanged, the SBP hopes to support both businesses and households during uncertain times.
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This decision marks another step in Pakistan’s effort to navigate a fragile global and domestic economic environment while sustaining growth and protecting public welfare.
