The State Bank of Pakistan (SBP) has increased its key interest rate from 11.5% to 12%, aiming to control rising inflation amid higher global energy prices and economic uncertainty.
The decision was announced on October 26, 2026, by the central bank’s Monetary Policy Committee. The new rate will take effect from October 27. Nine of the committee’s 10 members supported the increase.
SBP Governor Jameel Ahmad said rising oil prices linked to tensions in the Middle East, along with higher wheat prices in Pakistan, had worsened the inflation outlook.
The increase means borrowing may become more expensive for businesses and individuals, including those seeking loans. Higher interest rates can also encourage people to save money rather than spend it, helping reduce pressure on prices over time.
The central bank aims to bring inflation within its medium-term target range of 5% to 7%. It said the decision was necessary to manage inflation risks and maintain economic stability.
Key figures
| Indicator | Details |
|---|---|
| Previous policy rate | 11.5% |
| New policy rate | 12% |
| Increase | 0.5 percentage points (50 basis points) |
| Announcement date | October 26, 2026 |
| Effective date | October 27, 2026 |
| Committee vote | 9 out of 10 members |
| Inflation target | 5% to 7% |
