State Bank of Pakistan Raises Interest Rate to 11.5% After 22 Months
Karachi: The State Bank of Pakistan (SBP) has increased its key policy rate by 100 basis points to 11.5%, marking the first rate hike in nearly 22 months.
The decision was made during a Monetary Policy Committee (MPC) meeting held at the central bank’s headquarters in Karachi, chaired by Governor Jameel Ahmad. The committee reviewed key economic indicators, particularly in light of rising global uncertainties, including tensions in the Middle East.
According to the SBP, the move aims to address growing inflationary pressures. Pakistan’s Consumer Price Index (CPI) rose to 7.3% year-on-year in March 2026, reflecting an upward trend compared to the previous month. Core inflation in rural areas also climbed to 8.4%, driven largely by higher food prices, increased transportation costs, and ongoing supply chain disruptions.
Earlier, the Pakistan Institute of Development Economics (PIDE) had recommended maintaining the policy rate at 10.5%, warning that both an increase or decrease at this stage could be premature as the economy has yet to achieve full stability.
However, the central bank opted for a rate hike, emphasizing the need to anchor inflation expectations and maintain credibility in its monetary policy stance.
Economists believe the increase may help curb inflation but could also raise borrowing costs for businesses and consumers, potentially slowing economic growth in the short term.
