SBP keeps policy rate unchanged at 11.5% despite high oil prices

Islamabad: State Bank of Pakistan’ (SBP) decided to keep the policy rate unchanged at 11.5 percent in its Monetary Policy Committee meeting on Monday.

The Committee noted that the recent intensification of the prolonged Middle East conflict has led to further increase in already elevated global commodity prices, while supply chain disruptions have persisted. However, recent domestic macroeconomic data turned out broadly in line with the MPC’s expectations. Headline inflation increased to 11.1 percent year-on-year basis in August from 9.2 percent in July, while core inflation was slightly lower than expectations.

The statement said that external account pressures remained contained, supported by robust workers’ remittances and higher financial inflows. Meanwhile, economic activity, after witnessing a slowdown in Q4-FY26, started to pick up gradually, as reflected by recent high-frequency indicators. In this context, the MPC assessed that the current monetary policy stance remains appropriate to guide inflation towards the target range of 5-7 percent over the medium term. However, uncertainty regarding the outlook has increased, particularly from the worsening geopolitical environment.

Most market participants also expected no change SBP keeps policy rate unchanged at 11.5% despite high oil prices

in the policy rate, considering sufficient real interest rate gains and improving external finances to offset risks from elevated oil prices.

Interest rate expectations have remained broadly stable since the last monetary policy meeting in July, although risks to the outlook have increased as oil prices have risen and tensions in the Middle East have renewed uncertainty over global energy markets.