Key facts
- Pakistan's central bank maintained its benchmark interest rate at 11.5%.
- The decision was anticipated by 22 out of 39 analysts surveyed.
- Policymakers are balancing inflation risks from the Middle East conflict with moderating economic activity.
- The central bank is betting that lower oil costs from the Iran peace deal will aid efforts to cool consumer prices.
Pakistan's central bank opted to keep its benchmark interest rate steady at 11.5% on Monday. This decision reflects a careful balancing act by policymakers, who are contending with inflationary pressures potentially exacerbated by the ongoing conflict in the Middle East, while also acknowledging a slowdown in the nation's economic activity. The hold was in line with expectations, as 22 out of 39 analysts polled by Bloomberg had predicted no change to the key rate. The central bank is betting that lower oil costs stemming from the Iran peace deal will assist in cooling consumer prices, marking the first such response from a central bank to the deal.