The SBP interest rate in Pakistan rose by 50 basis points to 12% on Monday, the first change since the central bank held the rate at 11.5% after its April increase. State Bank of Pakistan (SBP) Governor Jameel Ahmed announced the decision at a press conference in Karachi after the Monetary Policy Committee (MPC) — the body that sets the policy rate — reviewed conditions since its September meeting.
Why the policy rate was raised
Ahmed said several “underlying factors” shaped the decision, above all the inflation outlook. He pointed to the conflict involving the United States, Israel and Iran and its effect on energy and oil prices, as well as developments in the domestic market and how those feed into inflation. In plain terms, the policy rate is the benchmark the SBP uses to influence borrowing costs across the economy; a higher rate is meant to cool demand when price pressures look set to rise.
Nine of the ten MPC members supported lifting the rate. One member disagreed and wanted an even larger increase.
Market reaction and recent path of rates
Topline Securities said the central bank’s move was “in line with our expectations.” The hike follows a long stretch of cuts and then a careful tightening: since mid-2024 the SBP had cut the key rate by a cumulative 1,050 basis points from a record 22% in June 2023, as inflation eased from multi-decade highs. A surprise 50-basis-point cut in December 2025 took the rate lower, after which it was held at 10.5% in January and March. In April the bank raised it by 100 basis points — its first increase in nearly three years — citing rising global energy prices and supply-chain risks, then kept it unchanged until this week’s 50-basis-point step to 12%.
Timeline: what has happened so far
- June 2023: The policy rate reached a record 22%.
- Mid-2024 onward: The SBP cut the key rate by a cumulative 1,050 basis points as inflation cooled.
- December 2025: A surprise 50-basis-point cut was delivered.
- January and March: The rate was held at 10.5%.
- April: The rate was raised by 100 basis points, then kept steady through the period after the September MPC meeting.
- This Monday: The rate was raised by 50 basis points to 12%.
This SBP interest rate in Pakistan decision keeps the focus on price risks from energy markets and the home economy. Borrowers and businesses will watch how banks pass through the higher benchmark in coming weeks.
Aasan alfaaz mein
State Bank ne policy rate 50 basis points barda hai. Ab yeh rate 12 percent hai. Mahngai aur oil ke khadshon ki wajah se yeh faisla liya gaya. Loan aur business credit mehnga ho sakta hai.
