KARACHI (Kashmir English): The State Bank of Pakistan has increased the interest rate by 50 basis points, raising the policy rate from 11.5 percent to 12 percent, effective from October 27, 2026.
The decision to raise the interest rate was made during a meeting of the State Bank’s Monetary Policy Committee, following a review of the domestic and global economic situation, inflation trends, global oil prices, and other economic indicators.
Announcing the new monetary policy, State Bank Governor Jameel Ahmed stated that 10 committee members participated in the decision-making process; nine voted in favor of the rate hike, while one member opposed it.
According to the Governor, significant changes have occurred in the domestic and global economic landscape since the last monetary policy meeting. Tensions in the Middle East, global crude oil prices consistently remaining above $100 per barrel, and rising energy costs have intensified inflationary pressures. Other economic factors, including wheat prices, were also taken into account when reaching this decision.
Jameel Ahmed noted that it was previously anticipated that the inflation rate would decline to around 7 percent by the first quarter of the next fiscal year. However, due to high global oil prices and their indirect effects, it may now take longer than expected to bring inflation down to the targeted level.
He added that while core inflation has shown improvement over the past two to three months, the potential secondary effects of rising oil prices in the coming months remain a cause for concern. Consumer expectations regarding inflation, as well as forecasts by economic experts, have been factored into the policy decision.
According to the Governor of the State Bank, rising prices of commodities in the global market—particularly oil—have increased pressure on Pakistan’s external accounts. Due to an uptick in imports, the current account position is likely to be less favorable compared to the previous review, despite improvements in exports and remittances.
