State Bank of Pakistan Holds Interest Rate at 11.5%

The State Bank of Pakistan maintained its benchmark interest rate at 11.5% on September 14, 2026, marking the third consecutive meeting without a change. The decision follows a 100-basis-point increase in April and comes as policymakers attempt to balance economic growth against rising inflation risks.

Consumer prices rose to between 11.1% and 11.15% in August, exceeding the central bank's medium-term target range of 5% to 7%. This inflationary pressure is largely attributed to Middle East tensions and the US-Iran war, which have pushed global oil prices to approximately $95 per barrel and increased costs for fuel, freight, and food. The bank noted that because a significant portion of energy supplies pass through the Strait of Hormuz, the economy remains vulnerable to further energy shocks.

Despite these risks, Pakistan has seen improved external economic conditions. The government recently raised $3 billion through a record junk-bond sale, and total liquid reserves reached approximately $23.7 billion as of September 4. While average inflation for the 2026-27 fiscal year is projected to remain below 9%, the bank indicated that persistent energy or food costs could necessitate a 50 to 100 basis point rate increase in October or December 2026.