SBP Holds Key Policy Rate at 10.5%
The State Bank of Pakistan (SBP) maintained its key policy rate at 10.5 percent following its Monetary Policy Committee (MPC) meeting on monday. This decision surprised many market participants, as a rate cut was widely anticipated.
Inflation and Economic Indicators
The SBP’s decision is rooted in a complex interplay of economic factors. While headline inflation registered at 5.6% in December 2025, core inflation has remained stubbornly high, stabilizing around 7.4%. This suggests underlying inflationary pressures persist within the economy.
The MPC also observed a widening trade deficit, driven by increased imports and decreased exports. However, this was offset by strong workers’ remittances and stable global commodity prices, which kept the current account deficit manageable.
Growth Outlook and Policy Rationale
The committee highlighted an improved outlook for economic growth alongside relatively stable inflation and current account figures. Considering these factors, the MPC deemed it prudent to maintain the current policy rate. This approach aims to balance the need for price stability with the desire to foster enduring economic growth.
Key Takeaways
- The SBP held its key policy rate at 10.5%, defying expectations of a cut.
- Core inflation remains a concern, staying elevated at 7.4%.
- A widening trade deficit is being mitigated by strong remittances and stable commodity prices.
- The economic growth outlook has improved.
- The SBP prioritizes both price stability and sustainable economic growth.
📢 Monetary Policy Statement – January 29, 2026
The Monetary Policy Committee (MPC) of the State Bank of pakistan (SBP) decided to maintain the policy rate at 10.5%.
Read the full statement: https://www.sbp.org.pk/mps/2026/Jan/Monetary-Policy-Statement-Jan-29-2026.pdf
— State Bank of Pakistan (@StateBank_Pak) January 29, 2026
Looking Ahead
The SBP will continue to closely monitor economic indicators, notably inflation and the current account balance. Future policy decisions will likely depend on how these factors evolve. Maintaining a stable macroeconomic environment will be crucial for supporting Pakistan’s economic recovery and long-term growth.
