Pakistan’s central bank has increased its benchmark interest rate by 100 basis points, raising it to 11.50 percent effective April 28, 2026. This decision was made during the Monetary Policy Committee meeting held on April 27, 2026, in response to mounting inflationary pressures and external economic challenges.
The rate adjustment followed a comprehensive review of key macroeconomic indicators, including inflation trends, trade dynamics, exchange rate fluctuations, and the impact of rising global oil prices. Domestic factors such as food inflation, agricultural output, and industrial sector performance were also carefully evaluated.
In a significant development, the hike addresses concerns over a global oil supply shortage that has driven energy prices higher, intensifying pressure on Pakistan’s import costs and external account balance. Increased fuel expenses are considered a major contributor to inflation expectations within the economy.
Despite appeals from business groups to keep rates steady or reduce them to encourage investment and job growth, the central bank chose a tighter monetary policy to stabilize prices and correct economic imbalances. The SBP emphasized that this move aims to anchor inflation expectations and protect macroeconomic stability amid uneven growth.
Notably, the central bank highlighted that persistent inflationary pressures and heightened external risks necessitated a cautious approach. The recent rate increase is expected to raise borrowing costs for both businesses and consumers, potentially affecting investment and economic activity in the near term.
