State Bank announces latest monetary policy

KARACHI: The State Bank of Pakistan (SBP) on Monday decided to keep the policy rate unchanged at 11.5 percent, saying the current monetary policy stance remains appropriate despite rising inflation and growing economic challenges, ARY News reported.

In its latest Monetary Policy Statement, the Monetary Policy Committee (MPC) noted that inflation has increased significantly in recent months. Headline inflation rose from 7.3 percent in March to 10.9 percent in April and 11.7 percent in May, driven by higher energy prices, increased transportation and production costs, and a sharp rise in wheat and food prices.

State Bank of Pakistan (SBP) said that although global oil prices have eased following recent positive geopolitical developments, they remain higher than pre-conflict levels. Economic activity has also shown signs of slowing due to elevated prices, austerity measures and prevailing uncertainty.

The MPC said Pakistan’s macroeconomic outlook remains broadly unchanged. It added that inflation is expected to remain in double digits over the coming months before gradually easing towards the target range of 5 to 7 percent in the medium term.

According to provisional estimates by the Pakistan Bureau of Statistics (PBS), the economy grew by 3.7 percent in FY26, compared with 3.2 percent in FY25. Growth was mainly supported by the services and industrial sectors, while large-scale manufacturing expanded by 6.5 percent during July-March FY26.

The SBP also highlighted improvements in the external sector. Foreign exchange reserves increased to $17.2 billion as of June 5, 2026, supported by successful IMF programme reviews and official inflows. The reserves are projected to reach $18 billion by the end of June.

However, the central bank warned that risks to the inflation outlook remain, including global commodity prices, energy tariff adjustments, weather-related pressures on food supplies and broader geopolitical developments.