The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) has decided to keep the policy interest rate unchanged at 10.5 percent in its first meeting of 2026.
The decision comes at a time when markets were expecting a possible rate cut amid improving economic indicators.
The crucial MPC meeting was held at the SBP headquarters in Karachi, where policymakers reviewed key economic factors before finalising the decision.
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These factors included inflation trends, economic growth forecasts, foreign exchange reserves, remittance inflows, and overall macroeconomic stability.
Before the announcement, analysts and financial markets had expected the central bank to reduce the policy rate by 50 to 100 basis points.
In the last monetary policy review of 2025, the SBP had reduced the base rate by 0.5 percentage points, bringing it down to 10.5 percent.
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Since then, several economic indicators have shown gradual improvement, strengthening expectations of a further rate cut in 2026.
Recent treasury bill auctions have recorded a significant decline in government borrowing costs, with rates falling into single digits for the first time in four years.
This development was seen as a strong signal that the central bank could move towards a more accommodative monetary policy in the near future.
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The MPC’s decision is expected to influence Pakistan’s economic direction in the first half of 2026.
Banks, investors, and businesses will closely watch future policy signals to assess whether monetary easing could still be possible later in the year.
