Pakistan's Central Bank Holds Interest Rate at 10.5% Amidst Market Expectations

• The State Bank of Pakistan (SBP) kept its policy rate unchanged at 10.5% despite market expectations for a reduction.
• The Monetary Policy Committee (MPC) noted December 2025 headline inflation at 5.6%, but core inflation remained high at 7.4%.
• Trade deficit widened due to increased imports and declining exports, while economic growth outlook improved.
• The decision aims to ensure price stability and support sustainable economic growth, with real GDP growth provisionally at 3.7% for Q1-FY26.
• SBP's forex reserves reached USD 16.1 billion by January 16, surpassing the end-December target.

Why It Matters: Pakistan's central bank maintained its interest rate at 10.5% to stabilize prices and support growth.