The central bank said the real policy rate remained sufficient to stabilise inflation over the medium term, underscoring the need for coordinated fiscal and monetary policy and continued structural reforms.
It said inflation averaged within its 5%-7% target range during the July-November period of fiscal year 2026, which ends next June, despite “sticky” core inflation.<\/p>\n
It added that the outlook was broadly unchanged, though inflation could rise temporarily toward the end of FY26 due to base effects before returning to target in the next fiscal year.<\/p>\n
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GROWTH MOMENTUM BUILDSThe SBP said economic activity was picking up, citing stronger-than-expected growth in large-scale manufacturing.
It kept its FY26 growth outlook in the upper half of its 3.25%-4.25% range, while flagging risks from a challenging global environment.Monday’s reduction takes the total easing since rates peaked at 22% in 2023 to 1,150 basis points. The SBP had delivered 1,100 bps of cuts between June 2024 and May 2025 and then held the rate steady for four meetings before Monday’s move.<\/p>\n
“The 50-bps cut was a major surprise and signals an intent to support faster economic growth,” said Fawad Basir, head of research at KTrade. He added that stronger reserves might have “eased concerns over the rupee and the current account deficit”, which had “underpinned expectations of an unchanged stance”.<\/p>\n
FX BUFFERS IMPROVEPakistan’s foreign exchange reserves have risen above $15.8 billion following a $1.2 billion IMF disbursement after the completion of programme reviews. The central bank projects reserves to reach $17.8 billion by June 2026, assuming planned inflows materialise.<\/p>\n