ISLAMABAD, July 30 (Xinhua) -- The State Bank of Pakistan (SBP) on Wednesday announced its decision to maintain the key policy rate at 11 percent, citing increased inflationary pressures linked to recent energy price adjustments.
In its statement, the central bank said inflation slowed to 3.2 percent year-on-year in June, mainly due to lower food prices. The bank expected a gradual increase, with inflation stabilizing within the 5 to 7 percent target range, due to upward revisions in gas tariffs, higher fuel prices, and the phase-out of temporary electricity relief.
According to the statement, the country's imports rose by 11.1 percent to 59.1 billion U.S. dollars in fiscal year 2024-25 (FY 2025), driven largely by a 16 percent increase in non-oil imports, reflecting stronger domestic demand. However, the trade deficit is expected to widen further in FY 2026 due to softening global trade.
On the external front, foreign exchange reserves have surpassed 14 billion U.S. dollars, aided by improved financial inflows and a current account surplus. The SBP said that Pakistan's recent sovereign credit rating upgrade helped reduce Eurobond yields and narrow credit default swap (CDS) spreads.
The central bank stated that the real interest rate remains adequately positive to help anchor inflation expectations and support medium-term price stability.
On the fiscal side, the Federal Board of Revenue collected 11.7 trillion rupees (around 42 billion dollars) in FY 2025, falling short of revised estimates by approximately 200 billion rupees.
The SBP emphasized that continued coordination between monetary and fiscal policies, alongside structural reforms, particularly in taxation and energy, is critical to ensuring sustainable and inclusive economic growth. ■
