Inflation hits 11.1%, policy stays at 11.5%

The Express Tribune reported that the State Bank of Pakistan left its policy rate at 11.5% on Monday, with seven of the ten Monetary Policy Committee members backing the unchanged stance. The decision came as escalating geopolitical strain lifted global commodity prices and added to inflation risks. Headline inflation climbed to 11.1% in August, up from 9.2% in July, yet the central bank said domestic indicators were largely consistent with its own outlook.

Food inflation was lifted by higher prices for wheat, allied products and perishable items, while costlier fuel fed into transport expenses. A sharp fall in domestic high-speed diesel prices during August partly offset higher global commodity costs, the committee said. Core inflation came in slightly below expectations, but households and firms expected higher inflation in September.

The SBP kept its FY27 real GDP growth projection at 3.5-4.5%, citing recovering petroleum sales, private-sector credit growth of 13.4% year-on-year and improving textile exports. Reserves rose to $21.4 billion following a $3 billion Eurobond issue in September, and the central bank expects import cover to near three months by late June 2027. The MPC warned that uncertainty has risen sharply and expects price growth to slow gradually, reaching the upper limit of the 5-7% band by June 2027.