The State Bank of Pakistan raised the policy rate by 100 basis points to 11.5% effective April 28, 2026. This unexpected move signals a shift towards prioritizing inflation control despite recent economic growth. Analysts had anticipated that the rate would remain unchanged at 10.5%.
The decision came during a meeting of the Monetary Policy Committee on April 27, 2026. The previous policy rate was maintained at 10.5% in March after a cut of 50 basis points in December 2025. The SBP emphasized the need for a balanced approach to safeguard price stability while nurturing sustainable growth recovery.
Inflationary pressures have been largely supply-driven, raising concerns among analysts. Arif Habib Limited warned that tightening monetary policy could risk a policy error. They noted, “Given the supply-driven nature of current inflationary pressures, responding with tightening risks a policy error.” Nonetheless, calls for tightening have gained traction, particularly around International Monetary Fund (IMF) considerations.
Despite these challenges, the economy showed signs of resilience, with a GDP expansion of 3.89% in Q2 and a current account surplus of $1.07 billion in March. Yet, energy prices continue to pose a significant risk to inflation levels.
The next MPC meeting is scheduled for June 2026 and will be closely monitored for potential further policy changes. Observers expect that ongoing economic indicators will heavily influence future monetary policy decisions.