- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 11.5%
The State Bank of Pakistan’s Monetary Policy Committee held the policy rate at 11.5% on June 15, 2026, judging the current stance appropriate to steer inflation back to the 5-7% target range over the medium term as the macroeconomic outlook remained broadly unchanged despite higher inflation and signs of moderating activity. After holding at 10.5% in January and March 2026, the MPC raised the rate by 100 bps in April to 11.5%. The Committee said headline inflation rose to 10.9% in April and 11.7% in May, with core inflation increasing to 8.7% in May, and expects inflation to stay in double digits for the next few months before easing gradually, while provisional real GDP growth for FY26 was estimated at 3.7% versus 3.2% in FY25; broad money growth slowed to 14.3% y/y by May 29 and private sector credit grew around 13%. On the external side, the current account posted a cumulative deficit of USD0.2 billion in July-April FY26, while successful International Monetary Fund reviews and ongoing purchases lifted State Bank of Pakistan FX reserves to USD17.2 billion as of June 5, with reserves projected at USD18 billion by end-June 2026. Globally, oil prices have eased after recent positive geopolitical developments but remain above pre-conflict levels, and the Middle East conflict is increasingly feeding through to macroeconomic conditions. The MPC said it will closely monitor incoming data and evolving developments while reiterating the need for continued fiscal consolidation and faster structural reforms.
Rate evolution
The State Bank of Pakistan’s policy rate rose by a net 50 basis points over the period, moving from a prolonged hold at 11 percent to a 50 basis point cut in December 2025, a reversal to 11.5 percent in April 2026 and holds at that level in June, July and September. Through October 2025, the Monetary Policy Committee held at 11 percent as inflation stayed moderate and core inflation eased, even as activity recovered and it flagged widening trade deficits, weak inflows, energy-price risks, commodities and flood-related shocks. The December cut reflected inflation averaging within the 5 to 7 percent target range, relatively benign commodity prices and anchored expectations, with the Committee seeing room to support sustainable growth despite sticky core inflation and a difficult export environment.
It held at 10.5 percent in early 2026 as stronger domestic momentum met higher geopolitical uncertainty over energy costs and supply disruptions, before raising the rate by 100 basis points in April to keep expectations anchored and contain second-round effects after inflation and core inflation rose, with inflation projected to stay above the 5 to 7 percent range for most of FY27. The Committee held the policy rate at 11.5 percent on June 15, judging the stance appropriate to guide inflation towards the target range over the medium term, and again on July 27 as lower global oil prices, moderating inflation and contained external pressures improved the outlook, though renewed regional conflict kept risks elevated. On September 14, it maintained the rate at 11.5 percent as headline inflation rose to 11.1 percent in August from 9.2 percent in July, global commodity prices increased and supply disruptions persisted amid the intensifying Middle East conflict, while external pressures remained contained and activity began to recover, with the Committee judging the stance appropriate despite increased uncertainty.