ISLAMABAD: The United States (US) is “closely” monitoring the situation after an attack on tourists in Indian-administered Kashmir, the State Department said on Thursday, as both India and Pakistan teeter on the brink of another conflict.
India and Pakistan have come close to a war as the two nuclear-armed South Asian neighbors downgraded diplomatic and trade relations, closed the main border crossing and revoked visas for each other’s nationals in tit-for-tat moves this week.
Indian Prime Minister Narendra Modi has vowed to pursue and punish the gunmen responsible for killing 26 civilians in the tourist hotspot of Pahalgam on Tuesday, accusing Pakistan of supporting “cross-border terrorism.” Pakistan has denied it was behind the attack, claimed by a previously unknown militant group.
“As we all know, it’s a rapidly changing situation and we are monitoring it closely,” State Department spokesperson Tammy Bruce said during a press briefing.
The statement came after Modi vowed to hunt down the gunmen responsible for killing 26 civilians in Pahalgam and the Indian police identified two of the three fugitive gunmen as Pakistani.
“I say to the whole world: India will identify, track and punish every terrorist and their backer,” Modi said, in his first speech since Tuesday’s attack in the Himalayan region. “We will pursue them to the ends of the Earth.”
Islamabad has called the attempts to link Pakistan to the Pahalgam attack “frivolous” and vowed to respond to any Indian action.
“Any threat to Pakistan’s sovereignty and to the security of its people will be met with firm reciprocal measures in all domains,” a Pakistani government statement said.
Kashmir has been divided between India and Pakistan since their independence in 1947, with both claiming the territory in full but governing separate portions of it. The Muslim-majority region has been the cause of two of their three wars and also witnessed a bloody insurgency against Indian rule.
Bruce, however, declined to comment on the status of the disputed region.
“We, of course, are not now taking a position on the status of Kashmir or of Jammu either,” she said.
Also on Thursday, the United Nations urged both India and Pakistan to show “maximum restraint” as the nuclear-armed rivals imposed tit-for-tat diplomatic measures.
US says ‘closely’ monitoring situation after attack on tourists in Kashmir
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US says ‘closely’ monitoring situation after attack on tourists in Kashmir
- The attack in Pahalgam, which killed 26 people, has once again brought India and Pakistan to the brink of another war
- The UN has urged both nations to show ‘maximum restraint’ as the nuclear-armed rivals announced tit-for-tat measures
Pakistan holds key rate at 11 percent as Mideast conflict overshadows growth push
- Central bank maintains cautious stance as heightened geopolitical tensions, volatile global oil prices add new inflation risks
- Bank paused its easing cycle in March, following cumulative cuts totaling 1,000 basis points from a record high of 22 percent
ISLAMABAD: Pakistan’s central bank kept its key policy rate unchanged at 11 percent on Monday, maintaining a cautious stance as heightened geopolitical tensions and volatile global oil prices add new risks to inflation and the fragile external sector.
A Reuters poll released earlier on Monday had shown analysts revising their expectations for a rate cut in light of Israel’s military strikes on Iran that began on Friday and have since intensified, pushing up global commodity prices.
“The [Monetary Policy] Committee noted some potential risks to the external sector amidst the sustained widening in the trade deficit and weak financial inflows. Moreover, some of the proposed FY26 budgetary measures may further widen the trade deficit by increasing imports,” the central bank said, announcing its decision to leave the rate unchanged.
“In this regard, the Committee deemed today’s decision appropriate to sustain the macroeconomic and price stability.”
Inflation in Pakistan has slowed markedly since peaking at around 40 percent in May 2023. However, last month it rose to 3.5 percent year-on-year, above the finance ministry’s projection of up to 2 percent, partly due to the fading of favorable base effects. The central bank projects average inflation between 5.5 percent and 7.5 percent for the fiscal year ending this month.
The bank paused its easing cycle in March, following cumulative cuts totaling 1,000 basis points from a record high of 22 percent, and resumed it with a 100-basis-point reduction in May.
Monday’s meeting came days after the government presented a tight annual budget, which increased defense spending by 20 percent but reduced overall expenditure by 7 percent. It projects GDP growth at 4.2 percent for the next fiscal year, up from a provisional estimate of 2.7 percent for the current year.
The MPC noted that despite the widening trade deficit, the current account remained broadly balanced in April, and foreign exchange reserves rose to $11.7 billion as of June 6 after the completion of the first review under the International Monetary Fund’s Extended Fund Facility.
Revised budget estimates show the primary surplus at 2.2 percent of GDP for FY25, up from 0.9 percent last year, with a higher target of 2.4 percent for the upcoming fiscal year.
Global oil prices have rebounded sharply, driven by the evolving Middle East crisis and some easing of US-China trade tensions, the MPC noted.
“Taking stock of these developments and potential risks, the Committee assessed that the real interest rate remains adequately positive to stabilize inflation within the target range of 5–7 percent,” the statement said.
It added that timely foreign inflows, planned fiscal consolidation, and structural reforms remained essential to maintain macroeconomic stability and achieve sustainable growth.
Pakistan says fuel stocks sufficient, vows vigilance as Israel-Iran conflict rattles markets
- Committee to monitor petroleum pricing and supply in response to Israel’s attack on Iran holds inaugural meeting
- Pakistan relies heavily on imported oil, global price swings can drain its foreign reserves and fuel domestic inflation
KARACHI: Pakistan currently holds adequate stocks of petroleum products and faces no immediate risk of supply disruption, the finance ministry said on Monday, while warning that continued vigilance was needed as Middle East tensions pushed oil markets into fresh volatility.
The statement came after the inaugural meeting of a committee formed by Prime Minister Shehbaz Sharif last week to monitor petroleum pricing and supply in response to an ongoing military confrontation between Israel and Iran.
Oil markets have been volatile amid the escalation, with Brent crude prices jumping about 7 percent last Friday to near $75 per barrel, but edging down on Monday, as renewed military strikes by both nations over the weekend left oil production and export facilities unaffected.
Concern is focused on potential disruptions in the Strait of Hormuz, through which roughly one‑fifth of global oil transits, and weak supply growth from Iran, which produces about 3.3 million barrels per day. Analysts caution any sustained spike could drive up global freight rates, insurance premiums and inflation, particularly in energy‑importing countries like Pakistan.
“The committee expressed satisfaction that Pakistan currently holds adequate stocks of petroleum products and there is no immediate risk of supply disruption. Nonetheless, members emphasized the need for continued vigilance given the rapidly changing regional context,” the finance ministry said after the first meeting of the committee, chaired by Finance Minister Muhammad Aurangzeb.
The ministry added that to ensure timely response and effective coordination, a working group would monitor developments on a daily basis, and the full committee would meet weekly to review the situation and submit recommendations to the prime minister.
“The Government of Pakistan remains fully committed to maintaining energy security, stabilizing markets, and protecting the national interest during this critical time,” the statement added.
The committee has been entrusted with monitoring the forward/futures prices of petroleum products and the predictability of supply chains, determining the foreign reserve implications of price volatility in the short and medium term, suggesting a plan, if and when required, to ensure there were no supply disruptions and the market was well supplied, and carrying out a detailed analysis of the fiscal impact in the event of a protracted conflict.
Pakistan relies heavily on imported oil, and any sustained spike in prices could widen its current account deficit and push inflation higher at a time when the country is struggling with low foreign reserves and slow growth.
The Israel-Iran conflict started on Friday when Israel launched a massive wave of attacks targeting Iranian nuclear and military facilities but also hitting residential areas, sparking retaliation and fears of a broader regional conflict. Over 220, mostly civilians have been killed in Iran so far, while Israel has reported 23 deaths in retaliatory strikes by Tehran.
Pakistan and Iran share a 909 kilometer (565 mile) long international boundary that separates Iran’s southeastern Sistan-Baluchestan province from Pakistan’s southwestern Balochistan province.
“Israel-Iran conflict presents complex challenges for Pakistan as rising oil prices may increase import costs and inflation, influencing monetary policy and growth, while disruptions to key routes like the Strait of Hormuz can affect energy supplies and critical projects,” Khaqan Najeeb, an economist and former finance ministry adviser, told Arab News last week.
“It can potentially affect consumer purchasing power and production costs ... Possible disruptions to shipping routes and higher freight charges might result in delays to imports and exports, thereby exerting additional pressure on Pakistan’s external sector.”
Rain predicted in parts of Punjab in next 24 hours as heatwave eases
- Met Office said on June 10 heatwave in several parts of the country was expected to continue well into middle of the month
- Heat wave has begun to subside with rainfall in many areas of Punjab in the last 24 hours, disaster management officials say
ISLAMABAD: Light rain is forecast in several divisions of Pakistan’s Punjab province over the next 24 hours, provincial disaster management officials said on Monday, as a prolonged heat wave begins to ease in some areas.
The Pakistan Meteorological Department (PMD) said on June 10 an ongoing heatwave in several parts of the country was expected to continue well into the middle of the month, with temperatures soaring above normal, disrupting daily life and raising health concerns.
However, the heat wave has begun to subside, a spokesperson for the Provincial Disaster Management Authority (PDMA) said in a situation report, and in the past 24 hours, Bahawalnagar recorded 8 millimeters of rain, Sahiwal 3 mm, and Toba Tek Singh up to 2 mm.
Rainfall was also reported in Multan, Sialkot, Jhang, Kasur, Faisalabad and Rawalpindi districts.
“Rain is predicted in Lahore, Rawalpindi, Faisalabad, Multan, Bahawalpur, Sargodha, Gujranwala, D.G. Khan, and Sahiwal divisions in the next 24 hours,” the PDMA spokesperson said.
Five people were injured in a roof collapse caused by rain in Kasur district in the last 24 hours, the PDMA confirmed.
PDMA Director General Irfan Ali Kathia “instructed to provide the best medical assistance to the injured” and urged residents to exercise caution during unstable weather.
“Citizens are requested to take precautionary measures in bad weather conditions,” Kathia said in the statement. “Stay in safe places in bad weather conditions. Never go out under the open sky during thunderstorms.”
Pakistan ranks among the top ten countries most vulnerable to climate change and has faced increasingly frequent extreme weather events in recent years, including deadly heat waves and floods.
Temperatures in the upper parts of the country including parts of Punjab, Islamabad, northwestern Khyber Pakhtunkhwa and the northern regions of Kashmir and Gilgit-Baltistan remained 5°C to 7°C above normal this past week. Temperatures in the southern Sindh, eastern Punjab and southwestern Balochistan provinces stayed 4°C to 6°C above normal.
Five militants with suspected India links killed in Pakistan’s northwest — army
- Four militants killed in a raid in Peshawar district late on Sunday
- Another was shot dead during separate operation in North Waziristan
ISLAMABAD: Pakistani security forces have killed five suspected militants in two separate intelligence-based operations in the country’s northwestern Khyber Pakhtunkhwa province, the military said on Monday, alleging the insurgents had links to India.
The Inter-Services Public Relations (ISPR), the army’s media wing, said four militants were killed in a raid in Peshawar district late Sunday, while another was shot dead during a separate operation in North Waziristan.
The army described the militants as being “Indian proxies.”
The military said troops “skillfully surrounded and effectively engaged the Indian-sponsored Khwarij location,” and after an “intense fire exchange, four Indian-sponsored Khwarij, including Kharji Haris and Kharji Baseer, were sent to hell.”
A search operation in North Waziristan led to the killing of another suspected militant, the statement added. Troops recovered weapons, ammunition and explosives at both sites.
Pakistan has long accused its neighbor India of backing separatist and other militants to destabilize its territory, a charge New Delhi strongly denies.
Militant violence has surged in the Khyber Pakhtunkhwa province since 2021, when a fragile ceasefire with the Pakistani Taliban collapsed. Attacks by separatists have also spiked in southwestern Balochistan. Islamabad claims that militants receive sanctuary and funding from foreign states like India, Afghanistan and Iran. All three deny the accusations.
There was no immediate response from India’s foreign ministry to the latest allegations.
Pakistan set to hold policy rate as Israel-Iran conflict overshadows growth push
- Eleven of 14 respondents in a snap poll expected central bank to leave the benchmark rate unchanged at 11 percent
- Central bank paused its easing cycle in March after cumulative cuts of 1,000 basis points from a record high of 22 percent
KARACHI: Pakistan’s central bank is expected to hold its policy rate today, Monday, a Reuters poll showed, as many analysts shifted their previous view of a cut in the wake of Israel’s military strike on Iran, citing inflation risks from rising global commodity prices.
Israel said on Friday it targeted nuclear facilities, ballistic missile factories and military commanders in a “preemptive strike” to prevent Tehran from building an atomic weapon.
Several brokerages had initially expected a cut but revised their forecasts after the Israeli strikes sparked fears of a broader conflict.
The escalating hostilities triggered a sharp spike in oil prices — a worry for Pakistan given the broader impact on imported inflation from a potentially prolonged conflict and tightening of crude supplies.
Eleven of 14 respondents in a snap poll expected the State Bank of Pakistan (SBP) to leave the benchmark rate unchanged at 11 percent. Two forecast a 100 basis-point cut and one predicted a 50 bps cut.
“There remains an upside risk of a rise in global commodity prices in light of geopolitical tensions which could mark a return to inflationary pressures,” said Ahmad Mobeen, senior economist at S&P Global Market Intelligence.
“The resultant higher import bill could also threaten external sector performance and bring pressure to the exchange rate.”
Inflation in the South Asian country has been declining for several months after it soared to around 40 percent in May 2023.
Last month, however, inflation picked up to 3.5 percent, above the finance ministry’s projection of up to 2 percent, partly due to the fading of the year-go base effects. The SBP expects average inflation between 5.5 percent and 7.5 percent for the fiscal year ending June.
The central bank paused its easing cycle in March after cumulative cuts of 1,000 basis points from a record high of 22 percent, and resumed it with a 100-basis-point reduction in May.
The policy meeting follows the release a tight annual budget, which saw Pakistan raise defense spending by 20 percent but overall expenditure was reduced by 7 percent, with GDP growth forecast at 4.2 percent.
Pakistan says its $350 billion economy has stabilized under a $7 billion IMF bailout that had helped it staved a default threat.
Some analysts are skeptical of the government’s ability to reach the growth target amid fiscal and external challenges.
Abdul Azeem, head of research at Al Habib Capital Markets, which forecast a 50-bp cut, said a lower rate could “support the GDP target of 4.2 percent and reduce the debt financing burden.”
