The committee's own reasoning
The decision was announced on July 27: the committee of Pakistan's central bank unanimously left the policy rate at 11.5 percent, judging the current stance appropriate to guide inflation toward the 5-7 percent medium-term target range. The figures do not make that judgement easy: headline inflation eased to 11.1 percent in June from 11.7 percent, and core inflation stayed elevated at 8.4 percent. The policy rate sits against a headline rate roughly twice the target.[1]
What the committee counts as changed sits in the external account rather than the price level. Pakistan's central bank surpassed its end-June reserve target of $18 billion; after recent debt repayments, reserves declined to about $17.3 billion as of July 17, with $20.20 billion targeted for end-December. The current account deficit was $139 million in FY26; as a year's external gap, that amounts to an account which has in practice closed.[1]
Which side the credit is coming from
The substance sits in the money and credit section. Broad money growth slowed to 13.2 percent from 15.2 percent at the previous meeting. Over the same period private sector credit accelerated to 14.9 percent, and the committee describes that increase as spread across working capital, fixed investment and consumer financing. Growth in net budgetary borrowing, meanwhile, slowed.[1]
The two series moving in opposite directions say more than a slowdown in one aggregate. The commercial bank makes the loan, and the deposit is born as that loan's shadow; so private credit accelerating while broad money slows does not show creation stopping, it shows creation changing hands. As the public side steps back, the private side steps in. The inference: 11.5 percent is being held as a real rate that protects the external cushion more than it suppresses domestic demand. A plainer alternative is available — with headline inflation still far above the target band, the committee may consider a cut premature, and that reading requires no additional story about the external account.[1]
The question that stays open
If that reading holds, the burden of adjustment falls on reserve accumulation more than on the rate, and that has its own timetable. The committee expects the current account deficit to stay between 0 percent and 1 percent of GDP in FY27, with growth of 3.5-4.5 percent. If private sector credit keeps growing faster than broad money, the domestic demand that feeds imports may rise with it; in that case the $20.20 billion end-December reserve target becomes the number that says more than the rate decisions do.[1]