SBP keeps policy rate unchanged at 11.5pc

The State Bank of Pakistan (SBP) has decided to maintain its key policy rate at 11.5 per cent, keeping borrowing costs unchanged amid renewed inflationary pressures and uncertainty in global energy markets.

The decision was taken by the SBP’s Monetary Policy Committee (MPC) on Monday as escalating tensions in the Middle East continued to push international oil prices higher. Rising energy costs have increased concerns about their potential impact on Pakistan’s inflation, external account and overall economic stability.

The central bank’s decision to maintain the rate was broadly in line with expectations among commercial bankers. However, some economists had anticipated a possible increase of 50 basis points, arguing that higher global oil prices and emerging supply-side risks could require tighter monetary policy.

Pakistan’s inflation rate has recently returned to double digits. Consumer inflation rose to 11.1 per cent in August, compared with 9.2 per cent in July, highlighting renewed price pressures across the economy.

The latest decision means the SBP has kept the policy rate unchanged since increasing it by 100 basis points in April. That increase came in response to higher international energy prices and concerns over disruptions to global supply chains. It was the first rate hike by the central bank in almost three years.

Before the April increase, the SBP had been gradually easing monetary policy. The central bank delivered a surprise 50-basis-point reduction in December 2025 and subsequently maintained the rate at its meetings in January and March.

With inflation now accelerating again and global oil markets facing heightened uncertainty, the central bank is facing a difficult balancing act. Keeping rates unchanged could support economic activity and investment, while tighter monetary policy could help contain renewed inflationary pressures.

The latest decision also comes at a time when Pakistan remains sensitive to fluctuations in international oil prices because of its reliance on imported energy.