The State Bank of Pakistan has increased its key policy rate by 1% to 11.5%, marking its first hike in nearly three years. The move comes as rising global tensions—especially in the Middle East—push up energy prices and fuel concerns about inflation.
The bank said ongoing conflict has driven up fuel costs, shipping charges, and insurance premiums, while also disrupting supply chains. These factors are expected to raise inflation in the coming months, possibly pushing it into double digits before easing later.
Recent data shows inflation already climbed to 7.3% in March, with core inflation at 7.8%. At the same time, business and consumer confidence has weakened. Despite this, Pakistan’s economy grew 3.8% in the first half of the fiscal year, and foreign reserves remain stable at around $15.8 billion.
The central bank emphasized that tighter monetary policy is necessary to control inflation and maintain economic stability. It also stressed the importance of fiscal discipline and structural reforms to strengthen the economy.
While growth may slow slightly due to global uncertainty, policymakers aim to keep inflation under control and ensure sustainable long-term economic progress.
