State Bank of Pakistan Governor Jameel Ahmad has said the country’s current monetary policy stance is appropriate for controlling inflation while supporting economic activity, investment and employment.
Speaking about the outlook for Pakistan’s economy, the SBP governor said the existing policy rate is aimed at keeping inflation within the central bank’s medium-term target range of 5 to 7 percent.
The State Bank of Pakistan kept its benchmark interest rate unchanged at 11.5 percent in July. The decision came as policymakers continued to assess inflationary pressures as well as risks to the external account arising from geopolitical tensions.
According to the latest figures cited by the central bank, Pakistan’s inflation rate eased to 9.2 percent in July from 11.07 percent in June. Average inflation during fiscal year 2025-26 stood at 7.1 percent.
The moderation in inflation represents an important development for the Pakistani economy, although price pressures remain above the SBP’s medium-term target. The central bank is therefore continuing to balance the need for price stability with the need to support economic growth.
Jameel Ahmad said Pakistan had made significant progress toward economic stability over the past year. He attributed the improvement to prudent fiscal and monetary policies as well as greater economic discipline.
The governor’s comments suggest that the SBP currently sees no immediate need for a major change in its monetary policy stance. Maintaining the policy rate at its existing level allows the central bank to continue monitoring inflation and other economic risks before making future decisions.
Interest rates have a direct impact on borrowing costs for businesses and consumers. A stable monetary policy environment can provide companies with greater certainty when making investment and expansion decisions, while also influencing household spending and savings.
The SBP is also keeping a close watch on external economic conditions. Geopolitical tensions can affect international commodity prices, trade flows and Pakistan’s external account position, creating additional challenges for monetary policymakers.
The decline in headline inflation is nevertheless a positive sign for consumers and businesses. If inflationary pressures continue to moderate, the central bank could have greater flexibility in determining future monetary policy based on economic conditions.
At the same time, maintaining inflation within the 5-7 percent medium-term target remains a key objective for the SBP. The central bank must balance price stability against the potential impact of high interest rates on investment, credit availability and economic activity.
The latest policy position indicates that the SBP considers the current interest rate level suitable for navigating Pakistan’s economic recovery. Continued fiscal discipline, monetary stability and improvements in economic activity will remain important factors in determining the country’s financial outlook.
For businesses, investors and consumers, future decisions on the policy rate will depend largely on inflation trends, external account risks, economic growth and developments in global and domestic markets.
