Overview
- The Monetary Policy Committee voted nine to one on Monday, Oct. 26, to lift the policy rate by 50 basis points to 12%, with the new rate taking effect on Oct. 27.
- The SBP cited a worsened inflation outlook driven by renewed Middle East hostilities, elevated global energy prices and recent domestic wheat supply frictions that pushed headline inflation to about 10.3% in September and core inflation to roughly 8.4%.
- Officials said foreign exchange reserves remained stable at about $21.5 billion, the SBP reached a staff‑level agreement with the IMF, and remittances and export signs have helped strengthen external buffers.
- The MPC kept its FY27 growth projection at 3.5–4.5% and expects the current account deficit to stay within 0–1% of GDP while warning that geopolitical escalation, volatile commodity prices and El Niño risks could weaken the outlook.
- Higher policy rates aim to keep real rates positive to limit second‑round inflation effects, but the move will raise borrowing costs for households and businesses and the central bank will monitor price and wage flows for further action.