SBP monetary policy committee meets today in Karachi as markets expect a rate hike

KARACHI: The State Bank of Pakistan’s Monetary Policy Committee (MPC) is meeting in Karachi on Monday to decide the future course of interest rates, a decision that will set borrowing costs across the economy for the weeks ahead. Governor Jameel Ahmed is chairing the meeting, and the decision will be announced at a press conference at the central bank’s head office later in the day.

The policy rate currently stands at 11.5%. The committee held it there at its September meeting, and it has not moved since a hike in April. This time, though, the market mood has clearly shifted towards tightening. In a Topline Securities survey, 61% of participants expect the rate to rise; 54% see a 50-basis-point increase taking it to 12%, while 7% expect a full percentage-point jump. The remaining 39% believe the committee will leave the rate unchanged.

Inflation is doing the pushing

The case for a hike rests squarely on inflation, which has stayed stubbornly above the central bank’s 5–7% target range. Headline inflation, which was 9.2% year on year in July, climbed to 11.1% in August and eased only slightly to 10.3% in September. Core inflation, hovering around 8.7%, suggests the pressure is broad rather than confined to a few items. The Middle East conflict, higher global commodity prices and prolonged supply-chain disruption have all added to it. Brent crude is trading at around $100 a barrel, and goods imports jumped to $6.17 billion in September, well above the recent monthly average of roughly $4.98 billion.

The argument for holding is not without weight either. The rupee has been broadly stable, foreign exchange reserves have improved, and economic activity has picked up — growth reached 2.8% year on year in the third quarter of 2026 after a 0.6% contraction in the second quarter. Some economists read that as evidence the economy can absorb tighter policy; others say it is precisely why the central bank can afford to wait.

Why today’s decision matters beyond the banks

Whatever the committee decides will ripple well past the banking sector. A higher rate would raise the cost of business loans, household financing and government borrowing, feeding through to prices and investment decisions in the months ahead. A hold, on the other hand, would signal that the central bank still expects inflation to drift down gradually towards its target.

Alongside the decision, the State Bank will publish its monetary policy statement explaining how the committee weighed inflation, growth and the global outlook. Businesses, banks and investors will all be watching this evening’s announcement closely.