KARACHI:Â The State Bank of Pakistan has increased its key policy rate by 100 basis points to 11.50 percent, with the new rate taking effect from tomorrow.
According to the central bank, the decision comes amid rising global economic pressures, as prolonged conflict in the Middle East continues to push up international oil prices, freight charges, and insurance costs.
The SBP noted that inflation rose to 7.3 percent in March, with concerns that it could reach up to 10 percent in the coming months.
The rate hike aims to anchor inflation expectations and prevent external price shocks from spilling over into the domestic economy.
The central bank further stated that economic growth stood at 3.8 percent during the first six months of the current fiscal year; however, weaker wheat production may slightly reduce the annual growth outlook.
On the external front, Pakistan’s reserves have improved significantly, reaching $15.8 billion, supported by an agreement with the IMF and the issuance of Eurobonds in international markets after four years.
The SBP expects foreign exchange reserves to exceed $18 billion by June 2026.
Meanwhile, the Federal Board of Revenue has reported a shortfall of Rs611 billion against its tax collection target, highlighting fiscal pressures.
On a positive note, Large Scale Manufacturing recorded a notable growth of 5.9 percent, indicating improvement in overall economic activity.
The central bank also cautioned that inflation is likely to remain above the 5–7 percent target range for most of the next fiscal year.
