KARACHI – State Bank of Pakistan (SBP) has decided to keep the policy rate unchanged at 11.5%, as the central bank weighs improving economic conditions against fresh inflation risks from higher oil prices and continued tensions in the Middle East.
The decision was taken by the Monetary Policy Committee (MPC) at its second meeting of fiscal year 2026-27 and sixth meeting of the calendar year.
For borrowers and businesses, the decision means there will be no immediate change in the benchmark interest rate. For the market, however, the move was hardly a surprise, with most analysts already expecting the SBP to stay put.
Pakistan’s external position has become more comfortable in recent months. Foreign exchange reserves have improved, the current account remains relatively contained and the country has successfully raised $3 billion through a Eurobond.
But there is another side to the picture. Global oil prices have climbed to around $95 per barrel, raising concerns that more expensive fuel could eventually feed into transport, food and other consumer prices. That has made the SBP more reluctant to ease monetary policy at this stage.
Analysts expect average inflation in FY27 to remain below 9%, which would still leave the policy rate offering a real interest rate spread of more than 250 basis points.
