KARACHI – State Bank of Pakistan raised its benchmark policy rate by 50 basis points to 12% on October 26, adding to borrowing costs after an easing cycle that had brought the rate down sharply during the current government’s tenure.
The latest increase takes the policy rate 1.5 percentage points above its December 2025 low of 10.5%. However, it remains 10 percentage points below the 22% prevailing when Prime Minister Shehbaz Sharif took office on March 4, 2024. The central bank’s policy path since March 2024 has moved through three phases, an initial period of tight monetary conditions, successive cuts through December 2025, and renewed increases in 2026.
From 22% to 13% in 2024
Sharif’s government began its tenure with policy rate at a record 22%. SBP maintained that level at its March 18 and April 29 meetings before starting its easing cycle in June. A 150-basis-point reduction on June 10 brought the rate to 20.5%, followed by a 100-basis-point cut to 19.5% on July 29.
The central bank accelerated the reductions later in the year, lowering the rate by 200 basis points to 17.5% on September 12 and by another 250 basis points to 15% on November 4. A further 200-basis-point cut on December 16 took the rate to 13%, completing five consecutive reductions during 2024.
Later, SBP reduced rate by 100 basis points to 12%. It held the rate in March before delivering another 100-basis-point cut on May 5, bringing it to 11%. The central bank then paused, maintaining 11% at four consecutive meetings in June, July, September and October. On December 15, it lowered the rate by another 50 basis points to 10.5%, taking the cumulative reduction since June 2024 to 1,150 basis points.
Complete Policy Rate Timeline
| Date | Policy rate | Decision |
| March 4, 2024 | 22.00% | —– |
| March 18, 2024 | 22.00% | Unchanged |
| April 29, 2024 | 22.00% | Unchanged |
| June 10, 2024 | 20.50% | Cut by 150 basis points |
| July 29, 2024 | 19.50% | Cut by 100 basis points |
| September 12, 2024 | 17.50% | Cut by 200 basis points |
| November 4, 2024 | 15.00% | Cut by 250 basis points |
| December 16, 2024 | 13.00% | Cut by 200 basis points |
| January 27, 2025 | 12.00% | Cut by 100 basis points |
| March 10, 2025 | 12.00% | Unchanged |
| May 5, 2025 | 11.00% | Cut by 100 basis points |
| June 16, 2025 | 11.00% | Unchanged |
| July 30, 2025 | 11.00% | Unchanged |
| September 15, 2025 | 11.00% | Unchanged |
| October 27, 2025 | 11.00% | Unchanged |
| December 15, 2025 | 10.50% | Cut by 50 basis points |
| January 26, 2026 | 10.50% | Unchanged |
| March 9, 2026 | 10.50% | Unchanged |
| April 27, 2026 | 11.50% | Raised by 100 basis points |
| June 15, 2026 | 11.50% | Unchanged |
| July 27, 2026 | 11.50% | Unchanged |
| September 14, 2026 | 11.50% | Unchanged |
| October 26, 2026 | 12.00% | Raised by 50 basis points |
Across the period, the SBP delivered eight rate cuts and two increases. The latest hike has partially reversed the earlier relief, bringing the benchmark back to the same 12% level announced in January 2025.
State Bank hikes Policy Rate to 12% as Oil Price Surge, Inflation Risks jolts Pakistan’s Economy
