The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) maintained the policy rate at 12% on Monday, setting the interest rate for the next two months.
The MPC had previously cut the rate by 10% over six sessions, including a 1% reduction in January 2025. Despite expectations of a further decrease to boost business activity, the central bank opted to hold steady.
12% Policy Rate
In January, the SBP reduced the key policy rate by 100 basis points (bps) to 12% from 13%, aligning with business community expectations. Since June 2024, the policy rate has been slashed by 1,000 bps from 22%.
SBP Governor Ahmed stated that the decision was made after careful evaluation. While inflation is expected to decline in February, core inflation remains a concern. He also pointed to strong remittance inflows and export growth as key factors supporting the current account.
