The State Bank of Pakistan has increased its key policy rate by 100 basis points to 11.50 percent. The decision was announced during the third Monetary Policy Committee (MPC) meeting of 2026.
The State Bank of Pakistan made this move as global economic uncertainty continues to rise. Growing tensions in the Middle East, especially the ongoing Iran-US conflict, have created pressure on international markets.
Rising geopolitical tensions have pushed oil prices higher in recent weeks. Higher oil prices often increase import costs for countries like Pakistan. This can lead to inflation and put extra pressure on the economy.
The State Bank of Pakistan said the decision aims to control inflation risks and maintain economic stability. Central banks often raise interest rates when inflation risks increase. Higher interest rates can reduce demand and slow down price growth.
The recent conflict between Iran and the United States has increased concerns in financial markets. Investors are closely watching energy prices and regional developments. Any major disruption in oil supply could create further economic pressure worldwide.
Earlier, Reuters reported that the State Bank of Pakistan was likely to keep the policy rate unchanged. However, the report also noted that worsening tensions between Iran and the US could force a policy change.
The latest rate hike shows that the central bank is taking a cautious approach. It reflects concerns over imported inflation, especially through fuel and energy costs.
Economists believe the increase may affect borrowing costs for businesses and consumers. Loans may become more expensive, while savings returns could improve.
The State Bank of Pakistan will continue to monitor inflation, exchange rates, and international developments. Future monetary policy decisions will depend on economic conditions and global market trends.
In other news read more about Pakistan May Raise Interest Rates if Inflation Surges
The move highlights Pakistan’s effort to manage inflation risks and protect economic stability during a period of global uncertainty.
