The State Bank of Pakistan (SBP) announced on Tuesday that it will maintain the policy interest rate at 11%, reflecting steady inflation and encouraging signs of economic recovery for 2025.
SBP Governor Jameel Ahmed stated that inflation stands at 3.2% as of June, down from 3.5% in May. Average inflation for the last fiscal year dropped to 4.49% a nine-year low after peaking at 38% in 2023. Although Governor Ahmed noted a minor uptick in May and June, he confirmed that the inflation outlook remains positive, with most forecasts projecting a stable range of 3–4% for the coming months.
Both food and core inflation eased over the past year, though core inflation may rise moderately going forward. The SBP cited improved agricultural performance and stable food supplies as supportive factors for price stability.
Exports grew modestly by about 4%, reaching $32.3 billion in FY25. Remittances boosted the economy by rising to historic highs, helping Pakistan secure its first external account surplus in 14 years. Analysts project remittances will exceed $40 billion in the current fiscal year, continuing to offset trade deficits caused by an 11% increase in imports, mainly driven by stronger non-oil economic activity.
The Monetary Policy Committee has decided to maintain the policy rate at 11%.
For details: https://t.co/NmPNdDRGFG #SBPMonetaryPolicy pic.twitter.com/8V4HWahVO4
— SBP (@StateBank_Pak) July 30, 2025The government forecasts economic growth between 3.25% and 4.25% for the ongoing fiscal year, fueled by a rebound in agriculture supported by favourable rainfall and increased water availability. The industrial and services sectors also show promising performance.
Despite a record current account surplus in 2023, the SBP projects a manageable deficit of up to 1% of GDP for the new fiscal year, largely due to increased imports.
Pakistan faces significant external debt repayments, totalling approximately $23–26 billion this fiscal year. However, improved terms on new loans and stronger reserves have reduced debt servicing costs, and timely payments remain on track.
Foreign exchange reserves recovered to $14.5 billion in June and recently surpassed $20 billion, the highest in over three years. The SBP aims to increase reserves to $15.5 billion by December and targets $17.5 billion by June 2026. Issuing new Eurobonds may further strengthen reserve buffers.
Governor Ahmed stressed that the SBP actively intervenes in the interbank currency market to keep the rupee stable, while fully meeting import and foreign exchange demands. The SBP regulates both the interbank market and licensed exchange companies, sharing any information about illegal markets with law enforcement agencies for action.
