Half a point, and a longer road to target

The State Bank of Pakistan lifted its policy rate by 50 basis points to 12% from October 27, a move that Mettis Global said investors largely anticipated. The vote was nine in favour, with one member calling for a bigger increase. Governor Jameel Ahmed said the debate has shifted towards the pace of tightening, while the bank now expects inflation to return to its target over a longer, unspecified period.

September inflation was 10.3%, while core inflation stood near 8.4%. The SBP cited higher energy costs and wheat prices, but kept its FY27 growth projection at 3.5-4.5%, after the Middle East conflict weighed on growth in FY26’s final quarter. Its current-account forecast has also worsened: the July, September shortfall reached $874 million, compared with $594 million a year earlier. Higher oil prices, financing needs and inflation will shape the next policy decision, according to the report.