SBP Keeps Interest Rate At 11.5% Despite Rising Inflation.
✧ GENERATE BRIEFING +
The State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) has voted to keep the policy rate unchanged at 11.5%, maintaining the benchmark interest rate for the third consecutive meeting. Formulated during the MPC's September 14, 2026 meeting—with a 7-3 majority vote among the ten committee members—the decision aligned closely with general market expectations despite mounting macroeconomic headwinds.While headline inflation rose sharply to 11.1% year-on-year in August (up from 9.2% in July) driven by global energy shocks and food-price volatility, the central bank opted for a steady stance, supported by a slightly lower-than-expected core inflation print and robust external buffers. Buoyant workers' remittances and steady financial inflows have successfully insulated the foreign exchange reserves, allowing the SBP to sustain its current real interest-rate cushion. However, analysts note that ongoing oil price spikes and escalating utility tariffs could elevate the risk of future monetary tightening in upcoming policy reviews.
The State Bank of Pakistan’s (SBP) Monetary Policy Committee has kept the policy rate unchanged at 11.5%, maintaining the benchmark rate for the third consecutive monetary policy meeting.
The decision was taken at the MPC’s September 14 meeting and was broadly in line with market expectations. Seven of the committee’s 10 members voted to maintain the current rate.
The central bank said headline inflation rose sharply to 11.1% year-on-year in August from 9.2% in July. However, core inflation was slightly lower than the MPC had expected, providing some offset to the renewed inflationary pressure.
The SBP also noted that external-sector pressures remained contained, helped by strong workers’ remittances and increased financial inflows. Pakistan’s improving external buffers have supported the case for maintaining the current monetary stance rather than immediately raising rates.
However, the central bank continues to face risks from higher global commodity prices, energy tariffs, supply disruptions and food-price volatility. The recent rise in international oil prices has added further uncertainty to Pakistan’s inflation outlook.
The policy rate has remained at 11.5% since the SBP raised it by 100 basis points in April 2026. That increase was the first rate hike in almost three years, following a 50-basis-point cut in December 2025.
Analysts said the current rate provides a sufficient real interest-rate cushion while allowing the central bank to monitor inflation and external developments. However, persistent oil and food-price pressures could increase the possibility of a rate hike in coming meetings, particularly later in 2026.
