Overview
- The State Bank of Pakistan’s Monetary Policy Committee voted 9‑1 to raise the policy rate by 50 basis points to 12 percent, with the new rate taking effect on October 27, 2026.
- Officials said the decision responded to a worse inflation outlook driven by higher global energy prices tied to the Middle East conflict and recent domestic wheat supply pressures.
- Headline inflation ran near 10.3 percent year‑on‑year in September and core inflation remained elevated, prompting the SBP to act to prevent price shocks from feeding into wages and services.
- The SBP highlighted stronger foreign exchange reserves—about $21.5 billion, roughly three months of import cover—and a staff‑level IMF agreement as factors that improved its room for policy tightening.
- The bank kept its FY27 growth forecast around 3.5–4.5 percent and warned that sustained commodity shocks, tighter global financing and adverse weather could raise risks to both inflation and the recovery.