Pakistan’s borrowing costs declined across most maturities on Monday after the State Bank of Pakistan (SBP) kept its benchmark policy rate unchanged and signaled a more favorable inflation outlook for the coming months.
Market data showed that money market rates eased following the central bank’s assessment that inflation could fall within its 5 to 7 percent target range, supported by easing regional tensions and lower global energy prices.
According to data released by Arif Habib Limited, the Karachi Interbank Offered Rate (KIBOR) recorded mostly downward movement across medium and long-term tenors, while short-term rates remained stable.
The one-week KIBOR held steady at 11.93 percent, while the two-week tenor remained unchanged at 11.97 percent. However, longer-term borrowing costs witnessed notable declines.
KIBOR Rates on June 15, 2026
| Tenor | Rate | Change |
|---|---|---|
| 1 Week | 11.93% | Unchanged |
| 2 Weeks | 11.97% | Unchanged |
| 1 Month | 12.08% | -9 bps |
| 3 Months | 12.21% | -21 bps |
| 6 Months | 12.36% | -20 bps |
| 9 Months | 12.74% | -25 bps |
| 1 Year | 12.83% | -23 bps |
Analysts believe the decline reflects growing expectations that inflationary pressures will continue to ease in the coming months. The recent reduction in international oil prices and the reported easing of tensions between the United States and Iran have improved market sentiment and reduced concerns about imported inflation.
Lower fuel and energy costs could help contain domestic price increases, encouraging investors to anticipate a more stable inflation environment. As a result, money market participants have started adjusting expectations for future interest rate movements.
Despite the recent decline, KIBOR rates remain above levels recorded at the end of June 2025. The one-year KIBOR, for example, is still approximately 152 basis points higher than its level a year earlier, indicating that borrowing costs remain elevated compared to historical averages.
Financial experts note that the current trend suggests markets are increasingly confident that inflation will remain under control if global oil prices stay subdued and economic stability continues to improve.
The movement in KIBOR rates comes shortly after the SBP decided to maintain its policy rate, signaling a cautious approach while monitoring inflation, economic growth, and external sector developments.
