SBP holds rate on inflation, ME risks

According to Business Recorder, the State Bank of Pakistan's Monetary Policy Committee kept the policy rate unchanged at 11.5 percent at its Monday meeting, with seven of the 10 members voting for the hold. It was the third straight meeting without a change, following a 100 basis point increase in April that took the rate up from 10.5 percent. Headline inflation rose to 11.1 percent year on year in August from 9.2 percent in July, while core inflation reached 8.7 percent.

The MPC warned that inflation risks have grown considerably, yet it still expects inflation to drift lower toward the upper bound of its 5 to 7 percent band by June 2027. Key risks it listed include volatile global commodity prices, the scale of electricity and gas tariff adjustments, supply disruptions and food price swings amid worsening El Niño conditions. The committee also linked higher global prices and longer supply chain disruptions to the intensifying Middle East conflict.

Other developments cited include a Moody's upgrade lifting Pakistan to B3, with a stable outlook, and a USD 3 billion Eurobond issue that pushed SBP reserves above USD 21 billion. Lending to the private sector rose 13.4 percent, and FBR tax collection stayed on target for July-August, while the central bank handed the government Rs1.9 trillion in profit, versus Rs1.4 trillion budgeted. The MPC expects FY27 real GDP growth to remain within 3.5 to 4.5 percent.