The State Bank of Pakistan (SBP) raised its benchmark policy rate by 100 basis points (bps) to 11.5% on Monday, opting for a cautious adjustment, as volatile oil prices and fresh inflation risks clouded the economic outlook.
The move came as the Monetary Policy Committee faced a finely balanced decision. TO Reuters The survey had shown that six in 10 analysts expected the central bank to keep the rate unchanged at 10.5%, while three forecast an increase of 50 basis points and one expected a larger increase of 100 basis points.
Pakistan’s CPI inflation accelerated to 7.3% y-o-y in March from 7% in February, missing the SBP’s 5-7% target range. Some analysts warned that inflation could move toward double digits in the fourth quarter of the fiscal year if external pressures persisted.
Oil prices have remained volatile due to the conflict between Iran and the United States, keeping global markets nervous and raising concerns about Pakistan’s import bill.
The SBP has cut rates by a cumulative 1,150 basis points since June 2024, when they hit a record high of 22%, and last cut the rate by 50 basis points in January.
