SBP hikes policy rate to 12% on inflation, energy price concerns

The State Bank of Pakistan lifted its policy rate by 0.5 percentage points to 12% on October 26, Business Recorder reported. Nine of the Monetary Policy Committee’s 10 members backed the move, the first increase since June 2026; one member preferred a bigger rise.

Governor Jameel Ahmad pointed to costlier energy, oil above $100 per barrel, and higher wheat prices as factors worsening the inflation outlook. September inflation reached 10.3% year on year, above the committee’s expectation, while its FY27 growth forecast remains 3.5-4.5%. The SBP also raised its annual remittance projection to $45 billion from $44 billion after first-quarter inflows reached $10.9 billion. The committee said the rate increase is intended to limit inflation pressures and keep inflation expectations anchored, with risks including Middle East tensions and elevated commodity prices.