ISLAMABAD, July 27 (Xinhua) -- Pakistan's central bank on Monday kept its benchmark policy rate unchanged at 11.5 percent, citing an improved macroeconomic outlook despite persistent risks from global commodity prices and regional geopolitical tensions.

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The decision was announced after the State Bank of Pakistan's Monetary Policy Committee (MPC) held its first meeting of the 2026-27 fiscal year.

The MPC said headline and core inflation eased in June, while high-frequency indicators suggested a pickup in economic activity and external account pressures remained moderate.

The central bank projected inflation to remain above its target range of 5-7 percent in the coming months before gradually easing to the upper end of the range by June 2027.

The MPC forecast Pakistan's economy to grow between 3.5 percent and 4.5 percent in fiscal year 2026-27, while the current account deficit is expected to stay within 0-1 percent of gross domestic product.

The central bank said its foreign exchange reserves, which exceeded the target of 18 billion U.S. dollars at the end of June, are projected to reach 20.2 billion dollars by the end of December 2026, supported by planned official inflows and an expected improvement in private sector inflows.