KARACHI (HRNW): The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) has decided to keep the policy rate unchanged at 10.5%. In its official statement, the central bank noted that the flow of economic data since the January meeting has largely remained in line with previous projections.
The SBP highlighted that inflation rose to 7.6% in February 2026 and is expected to stay above 7% for the remainder of the fiscal year. Despite these pressures, the central bank projected a GDP growth rate of 4.75% for Fiscal Year 2026. On the external front, Pakistan’s foreign exchange reserves reached $16.3 billion by February, with a target to hit $18 billion by June 2026.
The committee expressed significant concern regarding the escalating conflict in the Middle East, describing the macroeconomic outlook as highly uncertain. The SBP warned that the intensity of this conflict could have profound impacts on the national economy, as it has already led to increased fuel prices, freight charges, and insurance costs. To ensure sustainable economic growth, the bank emphasized the urgent need for structural reforms.
Key takeaways from the SBP notification include:
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Current Account: A surplus was recorded in the current account balance for January.
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Tax Collection: The pace of tax collection remains insufficient to meet the annual target.
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Private Sector Credit: There has been a substantial increase in credit disbursement to the private sector.
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Fuel vs. Food Prices: While local fuel price hikes are a concern, the SBP believes the impact may be mitigated by improvements in the food supply chain.
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