ISLAMABAD ( WNAM REPORET ): Pakistan’s central bank held its key policy rate steady at 11% on Monday, citing moderate inflation and continued economic momentum, but warned that the recent floods are likely to disrupt growth and increase inflationary pressures in the near term.
In its monetary policy statement, the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) said that inflation remained relatively moderate in July and August, while core inflation continued to ease at a slower pace. Economic activity, supported by high-frequency indicators such as large-scale manufacturing (LSM), showed improvement, but the overall macroeconomic outlook has weakened slightly due to widespread flooding across the country.
“This temporary yet significant flood-induced supply shock, particularly to the crop sector, may push up headline inflation and widen the current account deficit in FY26,” the MPC said. “Meanwhile, economic growth is now projected to moderate compared to earlier estimates.”
Despite the damage, the MPC noted that Pakistan’s economy is more resilient than in past flood events, citing stronger external and fiscal buffers, a low-inflation environment, and prudent policy coordination over the past two years.
