Pakistan Keeps Policy Rate at 11.5% Amid Split

For companies that rely on bank credit to fund working capital, inventory and expansion, the policy decision matters immediately. A rate at 11.5% keeps debt service expensive at a time when industrial output remains uneven and investment appetite is thin. FPCCI said it had been seeking a move to single digits, while the Korangi Association of Trade and Industry said high interest rates were slowing industrial activity, fresh investment and exports.

The complaint from business groups is not just about the level of the rate, but about timing. With trade deficit pressure, imported fuel costs and geopolitical uncertainty still weighing on margins, many firms argue that monetary policy is being asked to do too much of the adjustment. Pakistan’s petrol prices have also risen, adding to cost pressures across transport, logistics and manufacturing.

Still, the case for holding rates is gaining support from firms that see macro stability as a prerequisite for growth. The Overseas Investors Chamber of Commerce and Industry called the SBP’s decision prudent and balanced, saying stronger foreign exchange reserves and robust remittances give policymakers room to avoid further tightening without cutting too soon. The Rawalpindi Chamber of Commerce and Industry backed the pause as well, pointing to global inflationary pressures and Pakistan’s status as a net fuel importer.

That split captures the central tension in Pakistan’s economy: whether growth can be revived by cheaper credit alone, or whether rate cuts would simply risk reopening pressure on the rupee, prices and external balances. The SBP appears to be choosing the latter concern, betting that policy continuity will help preserve hard-won stability even if it delays a stronger industrial rebound.

For investors, the implication is that Pakistan is unlikely to see a sharp near-term lift in earnings from easier monetary conditions. Banks may preserve margin support from higher rates, but leveraged sectors such as cement, autos, textiles and smaller manufacturers face a slower recovery path. Foreign investors, meanwhile, will likely take comfort from policy predictability but still want evidence of fiscal discipline, tax reform and energy-price rationalisation before committing capital at scale.

The next test will be whether inflation cools enough, and external accounts stay stable enough, to give the SBP room to ease later this year. Until then, the rate decision suggests Pakistan’s policy debate remains divided between the demands of growth and the discipline of stabilization.