Karachi, March 9, 2026 – The State Bank of Pakistan (SBP) has decided to hold its key policy rate at 10.5 percent, pausing its rate cuts amid rising global oil prices and escalating regional tensions that could drive inflation higher.
Since mid-2024, the SBP has lowered the rate by 1,150 basis points, down from a record 22 percent in 2023, as inflation eased from multi-decade highs.
Tensions in the Middle East, particularly fears of disruptions to shipping through the Strait of Hormuz, have pushed international oil prices upward. Pakistan, which imports most of its energy, is highly sensitive to global fuel price fluctuations. Last Friday, domestic diesel and petrol prices were increased by around 20 percent in response to rising costs.
Governor Jameel Ahmad projected that the economy could grow 3.75–4.75 percent in FY26, supported by stronger domestic demand and previous monetary easing. However, inflation may temporarily exceed the central bank’s 5–7 percent target range before stabilizing.
Pakistan continues to implement a $7 billion IMF program, with the Fund urging policymakers to maintain a tight, data-driven monetary policy to manage inflation expectations and strengthen external reserves.
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