State Bank issues monetary policy report, projects moderate growth and rising trade deficit

The State Bank of Pakistan (SBP) has announced that it will now release a detailed report on the 15th day after each monetary policy decision, outlining key economic developments and the broader economic outlook.

In its latest Monetary Policy Report (MPR), the SBP noted that the interest rate was kept unchanged at 11% in the June and July monetary policy meetings. The Monetary Policy Committee expects the real policy rate to remain positive, aiming to keep inflation within the target range.

On the external front, the report projects a further widening of the trade deficit. Despite an anticipated rise in remittances, the current account deficit is forecast to reach one percent of GDP in FY26. Dollar purchases from the interbank market are expected to bolster SBP reserves to $15.50 billion by the end of December 2025.

The central bank anticipates a gradual uptick in economic activity, with the effects of previous policy rate cuts continuing to filter through the economy. Real GDP growth for FY26 is projected between 3.25% and 4.25%.

The MPR also outlines potential internal and external risks to the economic outlook and reviews policy decisions by major central banks in both developed and emerging economies.