Pakistan holds key rate at 11 percent as Mideast conflict overshadows growth push
ISLAMABAD: Pakistan’s central bank kept its key policy rate unchanged at 11 percent on Monday, maintaining a cautious stance as heightened geopolitical tensions and volatile global oil prices add new risks to inflation and the fragile external sector.
A Reuters poll released earlier on Monday had shown analysts revising their expectations for a rate cut in light of Israel’s military strikes on Iran that began on Friday and have since intensified, pushing up global commodity prices.
“The [Monetary Policy] Committee noted some potential risks to the external sector amidst the sustained widening in the trade deficit and weak financial inflows. Moreover, some of the proposed FY26 budgetary measures may further widen the trade deficit by increasing imports,” the central bank said, announcing its decision to leave the rate unchanged.
“In this regard, the Committee deemed today’s decision appropriate to sustain the macroeconomic and price stability.”
