Pakistan's central bank lifts the policy rate to 12% on energy risk

Dawn reports that 9 of the 10 members of the Monetary Policy Committee backed the increase, with 1 member pressing for a larger move. The Express Tribune says the new rate applies from 27 October. The SBP had cut 1,050 basis points from the record 22% set in June 2023, then raised the rate by 100 basis points to 11.5% in April 2026.

The committee noted that inflation, down to 10.3% in September, remains above the 5–7% target band and that the outlook has deteriorated since the previous review. Governor Jameel Ahmad said the year-end forecast of roughly 7% had been overtaken by events and that the return to target would take longer. According to the Express Tribune, Ahmad stressed that crude trading near 100 dollars a barrel is feeding through to domestic prices; friction in wheat supply is the second driver.

The external picture is under control for now. SBP reserves of about 21.5 billion dollars cover 3 months of imports. The first-quarter current account deficit was 874 million dollars, and the full-year gap is estimated at 0–1% of GDP. The remittance forecast has been raised to 44–45 billion dollars, with imports projected near 71 billion dollars. In a Topline poll before the decision, 49% of respondents expected no change and 49% a hike. The FPCCI, the KCCI and textile exporters criticised the move as a step that raises operating costs.