KARACHI
The State Bank of Pakistan held its key rate at 11.5 percent on Monday, extending a pause that began in April when the central bank ended a nearly three-year rate-hold cycle with a 100 basis point increase.
August inflation came in at 11.15 percent, above the SBP's medium-term target band. Geopolitical tensions in the Middle East have added upside risk to global oil prices, a key input for Pakistan's import-heavy energy bill.
The SBP cut rates by 50 basis points in December 2025, then held steady in January and March before the April hike to 11.5 percent. The central bank has maintained that level through June, July, and now August decision cycles.
The hold aligns with consensus among financial analysts. Only one analyst had penciled in a move to 12 percent ahead of the announcement.
Pakistan is operating under a $7 billion IMF support package that constrains monetary flexibility. Rate cuts before inflation cools risk triggering capital outflows and currency pressure—twin dynamics that have driven previous IMF bailouts in the country.
