Pakistan Holds Steady: Central Bank Surprises with No Change in Interest Rates

Pakistan's central bank kept the interest rate unchanged at 11%, against analysts' expectations of a cut. This move is part of ongoing IMF-backed reforms, as inflation edges higher. The government sees a stable economy despite subdued growth predictions and potential global commodity price impacts.

Pakistan's central bank on Wednesday surprised analysts by maintaining its key interest rate at 11%, amid concerns of rising inflation. This decision aligns with ongoing efforts to implement reforms under the IMF's $7 billion program and the government's contractionary budget aimed at curbing deficits.

The International Monetary Fund (IMF) recently adjusted its growth forecast for Pakistan's fiscal year ending June 2026 to 3.6%, falling short of the government's target of 4.2%. Following a pause in March and successive rate cuts totalling 1,100 basis points since June 2024, the State Bank of Pakistan (SBP) held its rate steady after a May reduction.

Despite government claims of economic stabilization, experts caution that growth remains vulnerable, especially with the global commodity price fluctuations that could strain prices and external balances.

(With inputs from agencies.)