State Bank of Pakistan raises policy rate to 12%; MPC vote was 9-1
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What happened
The State Bank of Pakistan raised its benchmark policy rate to 12% on October 26. It said the Monetary Policy Committee voted 9-1 for the increase, reported foreign-exchange reserves near $21.5 billion, and said the Middle East conflict was making fiscal management more difficult.
Why it matters
A policy-rate increase lifts the reference price for government borrowing, bank funding, and private-sector credit. The 9-1 vote also signals a firm internal policy bias, which can shape market pricing, treasury auctions, and expectations about the next inflation and exchange-rate steps.
The State Bank of Pakistan increased its policy rate to 12% on October 26, with nine of 10 Monetary Policy Committee members backing the move. The central bank said foreign-exchange reserves were around $21.5 billion and flagged the Middle East conflict as a complicating factor for fiscal management. The decision is a live constraint on sovereign borrowing costs, bank lending rates, and fiscal-monetary coordination in the near term.
Watch for
State Bank of Pakistan release on the next Treasury bill auction cut-off yields and accepted amounts by 2026-10-29 Pakistan Bureau of Statistics CPI release or flash inflation signal by 2026-10-30 that changes real-rate expectations Ministry of Finance update by 2026-10-30 on domestic borrowing plan, including PIB or T-bill auction size revisions State Bank of Pakistan open market operation results by 2026-10-29 showing liquidity injection or absorption volumes after the rate move