SBP keeps interest rate unchanged at 11.5pc

Dawn reported that the State Bank of Pakistan's Monetary Policy Committee left its key policy rate at 11.5 per cent on Monday. Seven of the ten committee members backed the hold. The committee tied the decision to a recent escalation in the Middle East, which it said pushed commodity prices higher and kept supply chains disrupted.

Headline inflation climbed to 11.1 per cent year-on-year in August from 9.2 per cent in July, while core inflation came in slightly below expectations. The committee described domestic data as broadly in line with its forecasts. It also noted that economic activity had picked up, and that external pressures stayed contained thanks to firm remittances and larger financial inflows.

Among other developments, the committee cited a Moody's upgrade of Pakistan's sovereign rating to B3 with a stable outlook. Fresh Eurobond funding of $3bn, raised from international capital markets, lifted foreign reserves to over $21bn. The SBP transferred Rs1.9 trillion in profit to the government, against a budgeted Rs1.4 trillion. Bankers had expected no change, though some analysts had forecast a 50-point increase.