KARACHI: In a unanimous decision aimed at ameliorating economic momentum, the State Bank of Pakistan (SBP) on Tuesday maintained its key policy interest rate at 10.5 percent. The Monetary Policy Committee (MPC) convened for its scheduled bi-monthly meeting, opting to hold the rate steady to nurture burgeoning private sector credit growth while inflation continues its precipitous decline into single digits.

SBP Governor Jameel Ahmad, chairing the MPC session, articulated that the macroeconomic indicators reflect a prudent trajectory. The central bank now projects a robust Gross Domestic Product (GDP) growth of 3.5 percent for the ongoing fiscal year (FY26), a salient upgrade from earlier conservative estimates.

The MPC’s communique highlighted that headline inflation has decelerated significantly, largely due to propitious base effects and stable commodity prices. However, the committee cautioned that concomitant risks remain, particularly regarding global geopolitical frictions and the stringent fiscal consolidation required by the federal government.

"The decision to maintain the policy rate is calculated to ensure that the nascent economic recovery is not stifled by premature monetary tightening," Governor Ahmad noted during the post-meeting press briefing. He emphasized that private sector credit offtake has shown heartening signs, particularly in large-scale manufacturing and agriculture.

Market participants reacted favorably to the announcement, with the Pakistan Stock Exchange witnessing an accretion in the benchmark index, reflecting renewed investor confidence in the central bank's stewardship of the economy.