State Bank Says Current Interest Rate is Right to Control Inflation

State Bank of Pakistan Governor Jameel Ahmad affirmed on July 2023 that the present interest rate policy is suitable to maintain inflation within the central bank's medium-term objective of 5-7%, while preserving space for economic activity, investment, and employment generation. The State Bank of Pakistan (SBP) maintained its benchmark interest rate at 11.5% in July, citing inflation and external account vulnerabilities due to geopolitical tensions.

Inflation declined to 9.2% in July from 11.07% in June, with average inflation at 7.1% for FY26. Ahmad noted that Pakistan's economy has made significant strides towards stability over the past year, driven by judicious fiscal and monetary policies and increased economic discipline. He stated that the nation is now transitioning from economic stabilization to sustainable growth, with GDP growth reaching 3.7% in FY26.

Projections indicate that growth will continue to hover between 3.5 and 4.5% in FY27. Ahmad highlighted record remittances that bolstered the external sector, with inflows surpassing $41 billion in FY26 and projected to rise to $44 billion in FY27. Foreign exchange reserves swelled to $18.4 billion by the end of FY26 and are anticipated to surpass $21 billion during FY27.

Additionally, Ahmad emphasized the SBP's endeavors to modernize Pakistan's financial system. The launch of PRISM+ has expedited large-value payments and settlements, ensuring safety and efficiency. Retail digital transactions surged from approximately 10 billion to 12 billion over the past year, signaling heightened acceptance of digital payments and promoting a more transparent and recorded economy.

He also showcased the introduction of InvestPak, aimed at providing the public with convenient and secure investment opportunities, alongside ongoing initiatives to promote Islamic banking, green finance, cybersecurity, and financial technology.