State Bank of Pakistan Raises Interest Rate to 12% From Today, October 27

Pakistan's central bank has raised its key interest rate to 12 percent, with the new rate taking effect from today, Tuesday, October 27. The State Bank of Pakistan's Monetary Policy Committee voted nine to one to lift the policy rate by 50 basis points from 11.5 percent, its first increase since April after holding steady at meetings in June, July and September.

The bank said the inflation outlook had worsened sharply since its last assessment. Headline inflation reached 10.3 percent year-on-year in September, above what the committee expected, while core inflation stayed elevated at around 8.4 percent. The bank blamed the intensifying Middle East conflict, global oil prices stuck above $100 a barrel, and higher domestic wheat prices over the past two to three months. The hike, it said, is meant to anchor inflation expectations, stop price pressures spreading through the economy, and bring inflation back toward its medium-term target range of 5 to 7 percent.

For ordinary Pakistanis, a higher policy rate usually means dearer borrowing — from business loans to the benchmark rates behind bank lending — though it can also support returns for savers. The bank kept its growth forecast for 2026-27 unchanged at 3.5 to 4.5 percent, noting that economic activity is gradually recovering, with large-scale manufacturing up 1.9 percent in July and August. It also reported foreign exchange reserves of around $21.5 billion, roughly three months of import cover, and a first-quarter current account deficit of $874 million.

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