SBP raises the policy rate by 50 basis points to 12 percent, effective 27 October

The State Bank of Pakistan (SBP) raised its policy rate by 50 basis points to 12 percent on 26 October 2026, up from 11.5 percent. SBP’s Monetary Policy Statement says the Monetary Policy Committee (MPC) decided by a majority of nine out of ten members, with effect from 27 October. SBP held the rate at 11.5 percent on 14 September.

Why SBP says it raised the rate

• Energy prices and the Middle East conflict. The statement says the intensification of the conflict, and low prospects of its near-term resolution, are keeping global energy prices persistently elevated. It says this has worsened the inflation outlook compared with the earlier assessment.
• Inflation. The statement gives headline inflation of 10.3 percent year on year in September, higher than the MPC expected, and core inflation of around 8.4 percent. It names energy prices and wheat supply problems as the two major factors. The Pakistan Bureau of Statistics September review gives the same 10.3 percent headline figure.
• The aim. SBP says the decision is meant to keep inflation expectations anchored, contain second-round effects of the supply shock and bring inflation within its 5 to 7 percent target range. It also says it keeps the real policy rate adequately positive on a forward-looking basis.

Other points in the statement

The MPC expects real GDP growth within 3.5 to 4.5 percent in FY27. The statement says private sector credit grew 14.1 percent year on year and SBP’s reserves were about US $21.5 billion.

The Express Tribune quotes Governor Jameel Ahmad saying crude oil around $100 per barrel had increased pressure on domestic prices, and that earlier assessments had put inflation near 7 percent towards the end of the year but reaching that level would now take longer. The Tribune says the previous meetings in June, July and September held the rate at 11.5 percent, after a 100 basis point increase in April.

What the statement does not say

It does not give the date of the next MPC meeting. It does not say how banks should price loans or what the change means for any category of lending, including housing finance. This article makes no forecast of future rates and no claim about property prices.

What borrowers can check

Borrowers on floating-rate loans may wish to ask their bank how the change affects their installments. For background, see how the SBP policy rate and housing finance affect property buyers.