The State Bank of Pakistan (SBP) has officially raised its key interest rate to 11.5%. The Monetary Policy Committee (MPC) announced this 100 basis point hike today, April 27, 2026. Consequently, the benchmark rate moves up from its previous level of 10.5%.
The interest rate corridor also shifts with this decision. The Reverse Repo Rate now stands at 12.50%. Meanwhile, the Repo Rate sits at 10.50%. This move marks a stark reversal in the central bank’s monetary policy stance. Just last month, on March 9, the MPC kept the rate unchanged to carefully monitor economic developments.
Mounting inflationary pressures forced the State Bank of Pakistan (SBP) to act aggressively. Recently, petrol prices experienced a significant surge. Therefore, the overall inflation outlook deteriorated rapidly. This alarming trend warranted a firm and immediate monetary response.
Furthermore, central banks utilize interest rate adjustments to manage economic stability. By increasing the cost of borrowing by one percentage point, the MPC aims to firmly anchor inflation expectations. Ultimately, the central bank wants to restore price stability across the economy.
Looking at the five-year interest rate corridor trend, the economy has faced extreme volatility. During the 2023-2024 window, interest rates peaked at a punishing 22%. After that peak, a steep easing cycle began. A long series of negative basis point adjustments successfully brought rates down to 10.5% by late 2025 and early 2026.
However, today’s 100 bps hike abruptly halts that downward trajectory. The central bank has clearly shifted back into a tightening posture to neutralize fresh economic threats.
