Karachi: Pakistan’s central bank on Monday decided to keep its main interest rate unchanged at 10.5 percent, going against market expectations of a possible rate cut.
The State Bank of Pakistan said the decision was taken despite signs that inflation is slowing and economic conditions are improving. Consumer inflation eased to about 5.6 percent in December, helped by lower food prices, although some other costs remain high.
The central bank had reduced the interest rate last month after holding it steady for several meetings. The rate had reached a peak of over 20 percent in 2023 during a period of severe economic pressure. Since then, the bank has gradually eased monetary policy as inflation cooled and foreign exchange reserves showed improvement.
Officials said they want to remain cautious to ensure price stability and protect recent economic gains. Pakistan is also under guidance from international lenders, including the International Monetary Fund, which has urged the country to avoid cutting rates too fast to prevent inflation from rising again.
Economists said future rate decisions will depend on how inflation and global economic conditions develop in the coming months. For now, the central bank appears focused on balancing economic recovery with the need to keep prices under control.