Fuel crisis, inflation pressures: SBP raises policy rate to 11.50pc

ISLAMABAD: Pakistan’s central bank has raised its benchmark interest rate by 100 basis points, citing inflationary pressures and external economic risks, in its latest monetary policy decision.

The State Bank of Pakistan (SBP) announced on Monday that its Monetary Policy Committee has increased the policy rate to 11.50 per cent, effective April 28, 2026. The decision was taken in a meeting held on April 27, 2026.

The rate hike comes after a detailed review of key macroeconomic indicators, including inflation trends, trade flows, exchange rate movements, and rising global oil prices. Domestic factors such as food inflation, agricultural output, and industrial performance were also part of the assessment.

The move was widely anticipated amid concerns over a global oil supply crunch, which has pushed up energy prices and added pressure on Pakistan’s import bill and external account balance. Higher fuel costs are seen as a key driver of inflationary expectations in the economy.

While business groups had urged the central bank to maintain or reduce rates to support investment and job creation, policymakers opted for a tighter monetary stance to stabilise prices and contain economic imbalances.

The SBP said the decision reflects the need to anchor inflation expectations and safeguard macroeconomic stability, even as growth remains uneven. The central bank noted that elevated external risks and persistent inflationary pressures warranted a more cautious policy approach.

The latest hike is expected to increase borrowing costs for businesses and consumers, with potential implications for investment and economic activity in the short term.