ISLAMABAD, Sept. 15 (Xinhua) -- The State Bank of Pakistan (SBP) on Monday decided to maintain its policy rate at 11 percent, assessing that the real interest rate remains adequately positive to stabilize inflation within the medium-term target range of 5 to 7 percent.
In its statement, the central bank noted that inflation could face volatility in the near term due to the impact of recent floods, which have pushed up food prices.
The bank said that some of this pressure may be offset by favorable adjustments in electricity tariffs.
On balance, inflation is projected to cross the upper bound of the 5-to-7-percent target for most of the second half of the ongoing fiscal year, before returning to the target range in the next fiscal year, it noted.
The central bank also highlighted risks to the outlook, including the evolving flood situation, volatile global commodity prices, and possible unanticipated adjustments in domestic energy tariffs.
On the external front, the SBP's foreign exchange reserves remained stable, despite net debt repayments and a current account deficit.
The SBP said that continued vigilance and policy coordination would be necessary to anchor inflation expectations and safeguard economic stability.
