KARACHI: Pakistan’s central bank on Monday left its benchmark interest rate unchanged at 11 percent for a third straight time, a move analysts described as “cautious” amid devastating floods that risk driving up food prices and undermining the country’s fragile recovery.
Floods in Pakistan’s eastern Punjab province, the country’s breadbasket, since late August have inundated thousands of acres of farmland, destroyed standing crops and killed livestock. Economists and traders have cautioned that the flooding, now moving downstream into Sindh, could elevate both food and overall inflation in the coming months due to crop losses and supply chain disruptions.
In its Monetary Policy Statement, the SBP warned that the “temporary yet significant flood-induced supply shock, particularly to the crop sector, may push up headline inflation and the current account deficit” during the current fiscal year. It projected inflation could rise above the 5–7 percent target band for much of FY26 before easing in FY27, while real GDP growth was trimmed to the lower end of the earlier 3.25–4.25 percent range.
“The Monetary Policy Committee decided to keep the policy rate unchanged at 11 percent in its meeting held on September 15, 2025,” the SBP said in a statement.
