SBP maintains 11pc interest rate amid Mideast conflict

The State Bank of Pakistan (SBP) maintained its policy rate on Monday at 11 per cent, after many analysts cited inflation risks from rising global commodity prices amid Iran-Israel tensions. The central bank’s policy rate, after being slashed by 1,000bps from 22pc since June 2024 in seven intervals, was cut to 11pc last month. “The Monetary Policy Committee (MPC) decided to keep the policy rate unchanged at 11 per cent,” the SBP said in a statement. Several brokerages had initially expected a cut but revised their forecasts after the Israeli strikes sparked fears of a broader conflict. The MPC observed that global oil prices had “rebounded sharply, reflecting the evolving geopolitical situation in the Middle East and some ease in US-China trade tensions”. “Taking stock of these developments and potential risks, the committee assessed that the real interest rate remains adequately positive to stabilise inflation within the target range of 5–7pc,” the MPC stressed.