SBP keeps policy rate unchanged at 11pc amid inflation risks due to floods

The State Bank of Pakistan (SBP) on Monday kept its benchmark policy rate unchanged at 11 per cent for the third time in row, as policymakers balanced inflation risks from flood-related crop damage against signs of fragile economic recovery.

“The Monetary Policy Committee decided to keep the policy rate unchanged at 11 per cent in its meeting held on September 15, 2025,” the central bank said in a brief statement, adding that a detailed note would be issued later.

Since June 2024, the SBP has reduced interest rates by a cumulative 1,000 basis points, bringing them down from 22pc to 11pc in seven rounds of cuts. The rate has remained steady since May, despite repeated calls from trade and industry groups for further reductions to stimulate growth.

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The business community expressed disappointment at the decision, while financial markets reacted positively. The Pakistan Stock Exchange, which had slipped below 155,000 points last week, rallied ahead of the meeting and gained 1,138 points in morning trading to reach 155,577.78.

Floods across the country have caused crop and land losses worth billions of rupees, fueling inflationary pressure in agriculture-based products such as rice and vegetables. While some stakeholders reported disruptions in cargo movement and supply chains, others maintained that essential supplies of food, fuel, and medicines remained stable.

Last month, Finance Minister Muhammad Aurangzeb hinted at possible room for further rate cuts later this year but stressed that the decision rested with the SBP and its Monetary Policy Committee (MPC).