The State Bank of Pakistan raised the policy rate by 100 basis points to 11.5% effective April 28, 2026. This unexpected move marks a significant shift in monetary policy.
Analysts had anticipated that the rate would remain unchanged at 10.5%. The previous policy rate was maintained during the Monetary Policy Committee meeting in March.
The decision, made on April 27, prioritizes inflation control over supporting short-term economic growth—despite a reported GDP expansion of 3.89% in Q2.
Energy prices and other supply-driven factors have contributed to rising inflation. Arif Habib Limited cautioned against tightening, stating that it risks a policy error given current pressures.
In December 2025, the SBP had cut the policy rate by 50 basis points to stimulate growth. However, this latest increase reflects growing concerns over inflationary trends.
The SBP previously emphasized a balanced approach to nurturing sustainable growth while safeguarding price stability. Calls for tightening have gained traction, particularly with IMF considerations looming.
As of midday, observers are keenly watching for reactions from markets and businesses. The next MPC meeting is scheduled for June 2026, where further adjustments may occur.
No official timeline has been shared regarding potential future changes, but the current environment suggests that policymakers will remain vigilant about inflation risks.
