State Bank of Pakistan Raises Policy Rate to 12 Percent

The State Bank of Pakistan raised its key policy rate by 50 basis points to 12 per cent on October 26, 2026. This action marks the first interest rate increase since April and was approved by the Monetary Policy Committee in a 9-1 majority vote.

Bank officials cited the intensification of the West Asia conflict and domestic wheat supply frictions as the primary drivers of heightened inflation risks and rising global energy prices. The committee stated the decision was necessary to keep inflation expectations anchored and contain the second-round effects of ongoing supply shocks.

Despite these inflationary pressures, the bank reported stable foreign exchange reserves of approximately USD 21 billion and increased its remittance outlook to USD 45 billion. Governor Jameel Ahmed noted a deterioration in the current account since the previous meeting, though he characterized the impact as minimal, estimated between zero and one per cent of GDP. The bank also revised real GDP growth to 3.7 per cent.