2 min read
Pakistan’s 6-month Karachi Interbank Offered Rate (KIBOR) dropped sharply to 10.76 percent in the current session from 11.11 percent a day earlier, reflecting market reaction to the State Bank of Pakistan’s decision to cut the policy rate by 50 basis points to 10.50 percent.
The decline in KIBOR follows the SBP’s latest monetary policy announcement, marking the first interest rate cut in the current easing cycle. The central bank cited contained inflation and signs of improving economic activity as key reasons behind the decision. Headline inflation remained within the SBP’s 5–7 percent target range during July-November FY26, even as core inflation stayed relatively sticky.
Lower KIBOR levels signal easing borrowing costs for businesses and the government, potentially supporting credit growth and investment. According to Bloomberg data, the immediate drop in the benchmark rate reflects growing confidence that monetary conditions are turning supportive.
An SBP policy statement noted that the inflation outlook remains broadly stable due to benign global commodity prices and well-anchored inflation expectations. The central bank also highlighted improving economic momentum, with large-scale manufacturing posting stronger than expected growth in the first quarter of FY26.
Analysts believe the fall in KIBOR could provide relief to borrowers and stimulate economic activity, especially in interest-sensitive sectors. However, policymakers remain cautious as core inflation risks persist, indicating that future rate decisions will depend on evolving inflation and growth trends.
