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Monetary Policy Committee (Pakistan)

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Monetary Policy Committee
مانیٹری پالیسی کمیٹی
Committee overview
JurisdictionGovernment of Pakistan
HeadquartersKarachi, Pakistan
Committee executive
Parent departmentState Bank of Pakistan
Websitesbp.org.pk

The Monetary Policy Committee (MPC) of Pakistan is the statutory decision-making body of the State Bank of Pakistan (SBP) responsible for formulating the country's monetary policy. It determines the policy (discount) rate, issues monetary policy statements, and sets the stance needed to achieve price stability and support sustainable economic growth.[1]

The MPC meets regularly to assess macroeconomic conditions, including inflation, growth, and external sector developments. In recent years, it has kept the key policy rate at 11 percent, citing persistent inflation risks, energy price pressures, and commodity price shocks.[2][3][4]

In September 2025, analysts expected the committee to extend its pause on rate changes, pointing to food inflation linked to floods and damage to farmland.[5]

Establishment

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The Monetary Policy Committee (MPC) was created through amendments to the State Bank of Pakistan Act, 1956, passed by the Parliament in November 2015. The bill was moved by Rana Muhammad Afzal Khan, Parliamentary Secretary for Finance, and approved by both the National Assembly and the Senate as part of efforts to align the SBP’s framework with international central banking practices.[6][7]

The amendments established the MPC as an independent decision-making body for monetary policy, transferring key functions from the SBP’s Executive Board and enhancing autonomy, transparency, and governance.[7]

The committee held its first meeting on 30 January 2016, marking its debut in setting monetary policy and deciding on issues such as interest rates, inflation, and liquidity management.[8][9]

Members

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The Monetary Policy Committee comprises a mix of ex-officio officials from the State Bank of Pakistan (SBP), independent economists, and non-executive directors of the SBP Board. The Governor of the SBP chairs the committee, while external members are appointed by the federal government to provide independent perspectives in decision-making.[10][11]

Name Position Type of member
Jameel Ahmad Governor of the State Bank of Pakistan (Chairperson) Ex-officio
Dr. Inayat Hussain Executive Director, SBP Internal / SBP Executive
Saleem Ullah Deputy Governor – Finance, Inclusion & Innovation, SBP Internal / SBP Executive
Muhammad Ali Malik Executive Director, SBP Internal / SBP Executive
Dr. Naved Hamid External Member External
Dr. Hanid Mukhtar External Member External
Dr. S.M. Turab Hussain External Member External
Najaf Yawar Khan Non-Executive Director, SBP Board Board Member
Muhammad Ali Latif Non-Executive Director, SBP Board Board Member
Fawad Anwar Non-Executive Director, SBP Board Board Member
Fayyaz ur Rehman Secretary to the MPC Administrative

Historical decisions

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Since its establishment in 2015, the MPC has overseen Pakistan’s monetary policy through periods of economic volatility. In response to the COVID-19 pandemic, the committee cut the policy rate by a cumulative 625 basis points between March and June 2020, lowering it to 7 percent to support growth during lockdowns.[12]

Between 2021 and 2023, the MPC pursued a tightening cycle to counter high inflation driven by global commodity prices and domestic currency pressures. By June 2023, the policy rate had reached a record 22 percent, the highest in Pakistan’s history.[13][14][15]

In 2025, with inflation easing but risks from food supply disruptions after severe floods, the MPC kept the policy rate steady at 11 percent across multiple meetings.[2][3]

Yearly Policy Rates

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Year Opening policy rate (%) Closing policy rate (%) Net change (%) Notes/Source
2015 9.50 6.50 −3.0 [16][17]
2016 6.50 5.75 −0.75 [18][19]
2017 5.75 6.00 +0.25 [19]
2018 6.00 10.00 +4.00 [19]
2019 10.00 13.25 +3.25 [19]
2020 13.25 7.00 −6.25 [19]
2021 7.00 7.00 0.00 [19]
2022 7.00 15.75 +8.75 [19]
2023 15.75 22.00 +6.25 [20]
2024 22.00 13.00 −9.00 [21]
2025 13.00 11.00 −2.00 current rate. [22]

References

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  1. ^ "Monetary Policy Committee". State Bank of Pakistan. Retrieved 12 September 2025.
  2. ^ a b "Pakistan central bank holds key rate at 11% as geopolitical tensions stoke inflation risks". Reuters. 16 June 2025. Retrieved 12 September 2025.
  3. ^ a b "SBP poised to maintain policy rate at 11pc". Dawn. 29 July 2025. Retrieved 12 September 2025.
  4. ^ "Pakistan's central bank leaves policy rate unchanged at 11% in surprise move". Arab News. 30 July 2025. Retrieved 12 September 2025.
  5. ^ "Pakistan seen extending pause on rate cuts after floods ravage farmland: Reuters poll". Reuters. 12 September 2025. Retrieved 12 September 2025.
  6. ^ "The State Bank of Pakistan (Amendment) Bill, 2015: Monetary policy body given independent statutory role". Business Recorder. 11 August 2015. Retrieved 15 September 2025.
  7. ^ a b "SBP Act amended". Dawn. 11 November 2015. Retrieved 15 September 2025.
  8. ^ "SBP announces constitution of monetary policy committee; first meeting on 30th". Geo TV. 27 January 2016. Retrieved 15 September 2025.
  9. ^ "SBP sets up Independent Monetary Policy Committee". Business Recorder. 26 January 2016. Retrieved 15 September 2025.
  10. ^ "Members of Monetary Policy Committee". State Bank of Pakistan. Retrieved 15 September 2025.
  11. ^ "SBP keeps policy rate unchanged at 20pc". Dawn. May 23, 2025. Retrieved 15 September 2025.
  12. ^ "Pakistan central bank slashes key interest rate to 7%". Reuters. 25 June 2020. Retrieved 15 September 2025.
  13. ^ "Pakistan central bank hikes rate to 17pc amid soaring inflation". Business Standard. 23 January 2023. Retrieved 15 September 2025.
  14. ^ "Pakistan raises key interest rate to record 22%". Al Jazeera. 26 June 2023. Retrieved 15 September 2025.
  15. ^ "SBP keeps policy rate unchanged at 22pc". The Express Tribune. 14 September 2023. Retrieved 15 September 2025.
  16. ^ "Press Release: Monetary Policy Statement – January 2015 (SBP)" (PDF). State Bank of Pakistan. 24 January 2015. Retrieved 24 September 2025.
  17. ^ "Monetary Policy Statement – July 2015 (SBP)" (PDF). State Bank of Pakistan. 16 July 2015. Retrieved 24 September 2025.
  18. ^ "Monetary Policy Statement – January 2016 (SBP)" (PDF). State Bank of Pakistan. 30 January 2016. Retrieved 24 September 2025.
  19. ^ a b c d e f g "Pakistan policy rate (monthly)". CEIC. Retrieved 24 September 2025.
  20. ^ "Pakistan central bank raises key rate to 22%". Reuters. 27 June 2023. Retrieved 24 September 2025.
  21. ^ "Pakistan central bank cuts key rate to 13%". Reuters. 16 December 2024. Retrieved 24 September 2025.
  22. ^ "Pakistan central bank keeps key rate at 11%". Dawn. 15 September 2025. Retrieved 24 September 2025.
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