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.