The SBP policy rate is likely to rise by 50 basis points, to 12%, when the State Bank of Pakistan holds its monetary policy meeting on Monday, October 26, reports say. A basis point is one-hundredth of a percentage point, so 50 basis points is half a point. The rate currently stands at 11.5%, and no decision has been announced yet, so a rise is an expectation rather than a settled outcome.
Why a rate rise is being considered
Inflation has been in double digits in five of the past six months. It reached 11.1% year on year in August, up from 9.2% in July, against the central bank's target range of 5 to 7%. High energy costs have added to the pressure, and core inflation, which excludes the most volatile items, stood at 8.7% in August.
Inflation expectations are also rising, which can keep prices climbing as wages and prices are reset. Reports note that the ex-post real interest rate, meaning the policy rate after adjusting for inflation, is below its historical average of about 2.5%. In plain terms, policy is less restrictive than usual.
Not every signal points toward a rise. The rupee has been broadly stable and dollar buffers have grown, which gives the central bank some room to hold. Economic activity rose 2.8% year on year in the third quarter of 2026, after a 0.6% contraction in the second quarter, and reports say the economy can absorb tighter policy.
What the central bank has said
At its previous meeting, the Monetary Policy Committee (MPC), which sets the rate, kept it at 11.5%. The committee said the intensifying Middle East conflict had pushed global commodity prices higher and extended supply chain disruptions, and that uncertainty about the outlook had grown.
The MPC expects inflation to ease gradually toward the upper end of the target range by June 2027. It warned, however, that risks to that path have increased. These include volatile commodity prices, electricity and gas tariff changes, supply disruptions, food price swings and worsening El Nino conditions.
Timeline: what has happened so far
- April: the SBP policy rate was raised, and it has been unchanged since.
- July: headline inflation was 9.2% year on year.
- August: headline inflation rose to 11.1%, with core inflation at 8.7%.
- Second quarter 2026: economic activity contracted 0.6%. Third quarter 2026: it grew 2.8%.
- Monday, October 26: the next monetary policy meeting, where a decision is due.
- June 2027: the MPC's expected point for inflation to ease toward the upper end of the target.
Aasan alfaaz mein
State Bank ki policy rate Monday 26 October ki meeting mein 11.5 feesad se barh kar 12 feesad ho sakti hai, aur reports ke mutabiq yeh izafa mumkin hai. Yeh qadam is liye soch jaa raha hai kyun ke mehngai is waqt 11.1 feesad hai, jo target se kaafi upar hai. Agar izafa hota hai to naye loan aur qarz mehenge ho sakte hain. Faisla abhi hona baqi hai, is liye meeting ke nateeje ka intezar karein.
