Maria Imran 
SBP raises policy rate
The SBP raises policy rate settings by 50 basis points to 12% from 11.5% in a decision announced on 26 October 2026. The new rate will come into effect on 27 October. There was a broad agreement on direction, with nine out of ten members of the Monetary Policy Committee voting in favour.
Sbp Raises Policy Rate By 50 Basis Points To 12%
The move is the first increase since April 2026 and follows a period of steady rates. The central bank seeks to anchor inflation expectations as inflation is still above its target range of 5% to 7%.
External Pressures And Energy Prices
Sharply higher crude oil prices amid escalating conflict in the Middle East weighed on the external account. Increasing fuel costs can quickly permeate transport, food and electricity prices in an energy-importing economy.
The report about possible disruptions to Hormuz that could hit Pakistan adds to the concern about risks to shipping routes. The timely rate decision shows the SBP’s preparedness to respond early rather than wait for pressures to build.
Digital Growth And Reform Drive
Pakistan’s economic narrative is much bigger than monetary policy. Google’s first office in Pakistan is a decade-long relationship and signals confidence in the digital economy. A digitally savvy workforce supports youth-led tech entrepreneurship.
The National AI Policy 2026 promises growth, innovation and modernisation of the public sector and could increase productivity over time. Stable prices make it easier for such ventures to plan their investing and hiring.
Policy Options After Rate Hike
Higher borrowing costs raise questions about how to protect growth and household budgets at the same time. A proposal for bigger reserves backs reforms under the IMF program and could add resilience against external shocks.
Practical steps include straightforward communication on the expected path of inflation, targeted support for vulnerable households and incentives for export and technology firms to continue investing.
Keep Exploring Pakistan’s Economic Outlook
Could Hormuz Disruptions Hit Pakistan?
Look into how shipping risks may affect energy and transport costs.
Is Google Boosting Pakistan’s Digital Economy?
Find how the first Pakistan office builds on a decade-long relationship.
Can Youth Power Tech Entrepreneurship?
Uncover how a digital-savvy workforce can drive new ventures.
Will Bigger Reserves Strengthen Pakistan’s Economy?
Check out the proposal supporting reforms under the IMF programme.
What Does Pakistan’s AI Policy Promise?
Dive into the plan for growth, innovation and public sector modernisation.
