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2025-09-15 19:34:48
Pakistan maintains policy rate at 11% as floods heighten inflation concerns. (1) The State Bank of Pakistan maintained its benchmark policy rate at 11% in September, in line with market expectations and marking the second consecutive month of unchanged policy. (2) Recent floods have severely damaged farmland in Punjab province, disrupting supply chains and pushing up prices of wheat, rice, and vegetables. (3) Manufacturers have raised prices due to rising fuel transportation costs and delayed input deliveries. (4) Headline inflation fell to 3.0% in August, below the central bank's target range of 5-7%. (5) However, rising food prices and crop losses caused by extreme weather may limit further easing of inflationary pressures. (6) Agricultural losses may drag down GDP growth, but post-disaster reconstruction could partially offset the negative impact. (7) Given the uncertainty, policymakers maintained interest rates to balance inflation risks with economic stability.
