SBP Holds Policy Rate at 11.5% as Inflation Rises and Global Risks Grow

The State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) has decided to maintain the policy rate at 11.5 percent, following its meeting held on September 14, 2026.

The decision reflects the MPC’s assessment of the evolving domestic and external economic environment, including renewed inflationary pressures, elevated global energy prices and heightened geopolitical uncertainty.

The MPC noted that headline inflation increased to 11.1 percent year-on-year in August 2026, compared with 9.2 percent in July. While core inflation remained somewhat more contained than previously anticipated, the recent increase in headline inflation highlights continued risks to the inflation outlook.

At the same time, the Committee observed that domestic economic activity has continued to recover, with recent high-frequency indicators showing an improvement in economic conditions. External-sector pressures have remained contained, supported by robust workers’ remittances and increased financial inflows.

Pakistan’s external position has also strengthened. The country recently raised US$3 billion through Eurobonds, contributing to an increase in foreign exchange reserves, while the sovereign credit outlook has improved following Moody’s upgrade of Pakistan’s rating to B3 with a stable outlook.

However, the MPC highlighted significant risks arising from the worsening geopolitical environment and its potential impact on global commodity prices, particularly energy costs. Persistent disruptions to supply chains and higher oil prices could add to domestic inflationary pressures and place renewed pressure on the external account.

The Committee therefore assessed that the current monetary policy stance remains appropriate to guide inflation toward the SBP’s 5–7 percent medium-term target range, while maintaining close vigilance over incoming economic data and global developments.

The MPC also emphasized the importance of maintaining a prudent combination of monetary and fiscal policies and continuing to build economic buffers to absorb potential external and supply-side shocks.

The decision represents the third consecutive meeting at which the policy rate has remained unchanged at 11.5 percent, following the 100-basis-point increase implemented in April 2026.

The SBP reiterated its commitment to maintaining price stability while supporting sustainable economic growth and safeguarding macroeconomic and financial stability.