SBP increases interest rate by 100 basis points

ISLAMABAD: The State Bank of Pakistan (SBP) announced on Monday that it will increase its key policy rate to 11.5 percent. The SBP announced through a statement that the Monetary Policy Committee decided during its current meeting to increase the policy rate by 100 basis points, which will start on Tuesday, April 28, 2026.

The SBP has declared that it will publish a complete monetary policy statement in the near future. Economic experts attribute the hike primarily to the increase in petroleum prices caused by escalating tensions in the Middle East, along with volatility in international financial markets.

The economy faces inflationary pressures, which force the central bank to implement tighter monetary policies that will restore economic stability.

The authorities implemented the policy tightening to achieve three goals which include controlling inflation, stabilizing the Pakistani rupee, and maintaining investor confidence.

Pakistan maintains its energy supply through energy imports from other countries. The domestic fuel costs rise whenever global crude oil prices increase, which subsequently leads to inflation in transportation, manufacturing, and food supply chains.

The State Bank operates according to International Monetary Fund guidance which requires it to sustain positive real interest rates for inflation control and external account stabilization purposes.