SBP Governor Jameel Ahmad reaffirmed the need for a tight monetary policy in a speech on February 9, 2026, at the AlUla Conference.
Despite falling inflation, the central bank holds the policy rate at 10.5%, prioritizing proactive measures to safeguard against future risks. He described high rates as necessary to handle anticipated global and domestic factors that might affect price levels.
Preemptive Actions Key to Central Banking Role
Ahmad explained that central banks must act timely and effectively to meet core goals. He called preemptive decisions the toughest part of the job, especially when high real interest rates draw criticism for slowing business and growth.
Many fail to see looming threats, but the bank retains elevated rates to counter potential inflation drivers from international events and local pressures. Recent months show inflation below the 5-7% target, yet vigilance remains critical.
Market Confidence in SBP’s Inflation Outlook
The governor highlighted strong credibility, as analysts widely expect inflation to stay in the 5-7% range through this year and next. This consensus reflects trust in SBP’s guidance and policies. While acknowledging stakeholder concerns over borrowing costs, Ahmad emphasized readiness for unforeseen challenges.
The stance supports macroeconomic stability over the next two years, avoiding aggressive easing that could undermine gains. Coordination with fiscal measures continues to balance growth aspirations with prudent risk management.