State Bank of Pakistan Maintains Policy Rate at 11.5 Percent

The State Bank of Pakistan (SBP) announced on Monday its decision to maintain the policy rate at 11.5 percent. This announcement followed a meeting held for the final policy review of the fiscal year 2026 (FY26).

The sole increase in the policy rate during FY26 occurred on April 27, when the SBP raised the benchmark rate by 100 basis points, bringing it to the current 11.5 percent. This increase was initially linked to geopolitical tensions stemming from the conflict in the Gulf, which led to higher oil prices and disruptions in global supply chains.

However, market participants noted that the rationale for a further increase in the policy rate has largely diminished. This is attributed to global oil prices stabilizing or easing. Analysts also indicated that developments over the past month have lessened concerns regarding a prolonged conflict in the Middle East, with supply chain conditions showing improvement.

Ahead of the meeting, Faisal Mamsa, Chief Executive Officer of Tresmark, stated that the Monetary Policy Committee (MPC) would likely evaluate factors such as currency stability and the external account before making a decision on rates. Sources within the financial sector had previously suggested a low probability of either a further policy rate increase or a reduction in the near term.

According to Dawn Pakistan, the central bank's decision reflects a consideration of prevailing economic and geopolitical conditions.