The SBP's decision to maintain its policy rate at 11% reflects the precarious nature of trying to curb inflation while nurturing a fragile economic recovery, with the added variable of catastrophic floods that have ravaged key agricultural regions. The central bank emphasised that while inflation has been coming down, core inflation is still problematic, and flood-induced supply shocks threaten to reverse these gains. The destruction of crops has already triggered sharp price increases for perishables and staples.

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