July 30, 2025

The State Bank of Pakistan (SBP) kept the policy rate unchanged at 11%, surprising markets expecting a 50–100bps cut. The MPC cited higher-than-anticipated gas and fuel price hikes as key inflation risks. While June CPI fell to 3.2%, energy price adjustments may push inflation above the 5–7% target band in some months.

Economic activity is picking up, but risks from imports, trade imbalances, and commodity volatility persist.

SBP reserves now exceed $14bn, supported by current account surplus and improved sentiment post-rating upgrade.

FBR tax collection for FY25 missed the revised target by Rs200bn.

Markets had widely expected a rate cut, with analysts citing easing inflation and stable external metrics.

The MPC emphasized maintaining a positive real rate and urged structural reforms for sustainable growth.

FY25 average inflation stood at 4.5%, slightly below target, with food and core inflation easing.

Imports surged 11.1%, led by non-oil goods; exports and remittances remained modest.