Pakistan holds key policy rate as floods stoke inflation fears

Pakistan's central bank held its key interest rate steady at 11 per cent on Monday for a third straight meeting, extending a pause in monetary easing as policymakers weighed inflation risks from flood-hit crops against a fragile economic recovery.

- 

The decision underscores policymakers' concern that flood damage to crops could reignite price pressures and strain growth, even as inflation has cooled and interest rates have already been cut sharply over the past year.

The central bank said in a statement that the economy was on a “significantly stronger footing” to withstand the fallout of the floods compared with past disasters, but warned the damage to crops and supply chains had moderated growth prospects.

It now sees 2026 gross domestic product growth near the lower end of its 3.25 per cent-4.25 per cent forecast range.