SBP keeps interest rate unchanged at 11.5pc

The State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) on Monday kept the key policy rate unchanged at 11.5 per cent. The decision comes as prolonged tensions in the Middle East drive up global oil prices and fuel inflation. A detailed statement by the MPC regarding today’s meeting is expected to be released shortly. Bankers had anticipated a status quo, but some analysts had predicted that the central bank was in a difficult position and would lift the policy rate by 50 points. Renewed US-Iran hostilities and the risk of disruption to shipping through the Strait of Hormuz have kept oil prices elevated, adding to import costs in energy-dependent Pakistan. The Sensitive Price Index (SPI), or the weekly inflation, rose 8.62pc year-on-year for the week ending on September 10, with a major contribution from costly onion and petroleum products. Headline inflation jumped to 11.15pc year-on-year in August from 9.2pc in July, more than tripling from 3.1pc a year earlier and moving further above the SBP’s 5pc-7pc medium-term target. The SBP has held the rate steady since raising it by 100 basis points in April in response to rising global energy prices and supply chain risks — its first increase in nearly three years. Before that, the central bank had maintained the rate at 10.5pc in January and March after a surprise 50bps cut in December 2025. The SBP has cut the key rate by a cumulative 1,050 basis points since mid-2024, from a record 22pc reached in June 2023, as inflation cooled sharply from multi-decade highs. Additional input from Reuters