Global Market Update: Pakistan's central bank hikes key rate by 100 bps to 11.5%

Pakistan's central bank ​raised its key policy ​rate by 100 basis points ​to 11.5% on Monday, its first hike in almost three years, as rising oil prices ‌from the Iran-U.S. ⁠war ⁠threatened to push inflation higher in the import-dependent ​nation.

The State Bank of Pakistan's Monetary Policy Committee surprised most forecasters - six of 10 analysts in a Reuters poll had expected rates to remain on ⁠hold at ‌10.5%.


The SBP has cut ​rates ​by a cumulative 1,150 basis ⁠points since June 2024, from a record ​high of 22%.

Pakistan's consumer price ​inflation quickened to 7.3% in March compared to the same period last year, breaching the central bank's 5% to 7% target range, with some analysts ‌warning it could approach 10% in April.

A ceasefire in the Iran-U.S. ​war ​has so ⁠far failed to produce a lasting peace deal, keeping oil prices elevated.

Pakistan is on a $7 ​billion IMF programme. The fund has previously cautioned against premature easing and urged the bank to maintain a positive real interest rate.