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Islamabad, 9 February 2026: The State Bank of Pakistan (SBP) today released its bi-annual Monetary Policy Report (MPR), providing a comprehensive review of macroeconomic developments, outlook, and factors guiding the Monetary Policy Committee’s (MPC) decisions since August 2025.
The report highlights an improving macroeconomic environment, supported by prudent monetary policy and ongoing fiscal consolidation. Inflation is projected to remain within the 5–7 percent target range during most of FY26 and FY27, despite short-term volatility. The current account deficit is expected to remain contained at 0–1 percent of GDP in FY26, aided by strong workers’ remittances and planned official inflows. Consequently, SBP’s foreign exchange reserves are projected to reach $18 billion by June 2026, providing nearly three months of import cover.
Economic activity has strengthened due to easing financial conditions and a recent reduction in the Cash Reserve Requirement to 5 percent, with real GDP growth projected at 3.75–4.75 percent for FY26 and expected to rise further in FY27.
The MPR also notes risks to the macroeconomic outlook, including global tariff uncertainties, commodity price volatility, below-target domestic revenue collection, and potential adverse climate events. The report stresses the need for structural reforms to enhance economic resilience, improve productivity, and address losses in state-owned enterprises.
Additionally, the report features four analytical boxes covering:
- Monetary policy transmission mechanisms and the impact of prior rate reductions,
- Heat maps as tools to consolidate economic activity signals,
- The role of surveys and structured interactions with private sector stakeholders in policymaking.
SBP emphasized that these efforts aim to enhance transparency, informed policy decisions, and stakeholder engagement, reinforcing confidence in Pakistan’s macroeconomic stability.
