SBP likely to raise policy rate to 12%: Bloomberg

Bloomberg expects the State Bank of Pakistan to lift its benchmark rate by 0.5 percentage point to 12% at the monetary policy meeting scheduled for October 26. The rate has remained at 11.5% since the previous adjustment in April, although the Monetary Policy Committee left it unchanged at its last meeting.

Inflation has exceeded 10% in five of the last six months, against the SBP’s 5-7% goal, while expectations for future price increases have also strengthened. Economic output grew 2.8% year on year in 3Q26 after shrinking 0.6% in 2Q26; the rupee’s relative stability and larger dollar reserves are cited as reasons the central bank could instead hold. August inflation reached 11.1%, compared with 9.2% in July, and core inflation was 8.7%.

The MPC previously pointed to higher global commodity costs, supply interruptions and adjustments to electricity and gas tariffs as risks. It expects inflation to move gradually towards the upper boundary of its target by June 2027, while warning that risks have increased.