Further policy rate cuts by the State Bank of Pakistan (SBP) will depend on the economic fallout from recent floods and the outcome of the ongoing International Monetary Fund (IMF) review, Governor SBP Jameel Ahmad said in an interview with Bloomberg.

The statement comes as the central bank maintains a cautious stance on monetary policy amid renewed inflation risks.

Governor SBP noted that inflation may temporarily exceed the upper bound of the 5-7% medium-term target range in early 2026, but is expected to remain within the target band on average during the current and next fiscal years.

The remarks come ahead of the Monetary Policy Committee (MPC) meeting scheduled for October 27, while an IMF mission is in Pakistan for the second review of its $7 billion loan programme.

At its previous meeting, the MPC kept the policy rate unchanged at 11%, citing the adverse impact of recent floods on the near-term macroeconomic outlook.

The monsoon floods have inflicted billions of dollars in damage across the country, heightening inflationary pressures and risks to the external and fiscal accounts.

Governor Ahmad said the SBP’s tight monetary stance has been instrumental in controlling inflation and remains effective going forward.

“The policy rate is positive — substantially positive — and this type of tight stance has contributed to controlling inflation,” he said, adding that monetary and fiscal coordination continues to show “good progress.”