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ISLAMABAD: The Monetary Policy Committee (MPC) of the State Bank of Pakistan on Monday decided to keep the policy rate unchanged at 11 percent, marking the fourth consecutive meeting in which borrowing costs have been held steady.

The SBP’s decision comes at a time when the central bank is juggling modest economic growth, external‐sector vulnerabilities and inflation risks. After having slashed rates significantly in 2024, it entered a pause campaign earlier this year, choosing stability over further easing given flood-related supply disruptions, rising food inflation and pressures on the current account. 

“The Monetary Policy Committee decided to keep the policy rate unchanged at 11 percent in its meeting held on October 27, 2025,” the central bank said on X. 

Last week, all 10 analysts surveyed by Reuters said they expected the State Bank of Pakistan (SBP) to keep the policy rate unchanged, extending its pause as recent floods ravaged farmland and border closures with Afghanistan drove up prices of staples like tomatoes and apples.

Since October 11, border closures with Afghanistan following clashes have disrupted trade and deepened food shortages, intensifying inflationary pressures.

The SBP last held rates in September, warning floods could push inflation above its 5 percent–7 percent target. Pakistan’s headline inflation rate accelerated to 5.6 percent on a year-on-year basis, up 2 percent from the previous month.

Floods, in August, swamped Punjab’s farmland and industrial hubs, killing more than 1,000 people, displacing 2.5 million and damaging crops and factories.

The central bank has lowered rates by 1,100 basis points since June 2024, when they peaked at 22 percent after inflation neared 40 percent the year before. Its last 100-bps cut came in May, followed by holds in June, July, and September amid uncertainty over energy and food prices.

With inputs from Reuters

ISLAMABAD: Pakistan and a visiting delegation of the European Parliament reaffirmed their partnership under the GSP+ preferential trade framework during talks in Islamabad on Monday, while Pakistan raised concerns over the withdrawal of duty concessions on ethanol exports and the ongoing Geographical Indication (GI) dispute over Basmati rice.

The GSP+ scheme grants Pakistan duty-free access to the EU market for most exports in exchange for progress on human rights, labor protections, environmental commitments and governance reforms. The EU is Pakistan’s largest export destination, particularly for textiles, leather, ethanol and agri-food products.

At Monday’s meeting, Pakistan’s Commerce Minister Jam Kamal Khan told the delegation that the European Commission’s suspension of duty-free treatment for Pakistani ethanol earlier this year, citing increased export volumes, had reduced market competitiveness and impacted sugarcane-linked rural economies, where farming communities depend on surplus molasses processing for income.

On Basmati, Pakistan noted that both Pakistan and India have sought Geographical Indication (GI) protection for the rice in the European Union, and urged the EU to ensure a fair and impartial process that reflects the crop’s cultivation across the Punjab region on both sides of the border.

“The withdrawal of duty concessions on Pakistan’s ethanol exports under the GSP+ scheme has adversely affected rural livelihoods and farming communities,” a statement by the Press Information Department said, quoting Khan, adding that Pakistan also urged the EU to ensure “a fair and impartial decision that recognizes Pakistan’s heritage and rightful claim to the globally renowned rice variety.”

The ministry noted that both issues were significant for Pakistan’s rural economy and the livelihoods of farmers, particularly in areas affected by recent floods.

The ministry said the government highlighted reforms under the GSP+ monitoring process, which links continued duty-free access to progress on human rights and governance standards.

It pointed to Pakistan’s election to the UN Human Rights Council (2026–28), the National Commission for Human Rights receiving “A status” accreditation, and new legislation including the Islamabad Child Marriage Restraint Act 2025 and the Commission for the Protection of Journalists and Media Professionals.

Pakistan also asked the EU for technical assistance and transition support to meet upcoming European market regulations that will affect Pakistani exports, including the Carbon Border Adjustment Mechanism (CBAM) on emissions-linked products, the Corporate Sustainability Due Diligence Directive (CSDDD) on supply-chain oversight, and the EU Deforestation Regulation (EUDR) governing agricultural imports.

These requirements will shape future access to the EU market for textiles, leather, agriculture and manufacturing exports.