The State Bank of Pakistan has raised its policy interest rate to 12%, citing inflationary pressures linked to rising energy prices amid the ongoing conflict in the Middle East.
Speaking after the monetary policy announcement, Governor Jameel Ahmad said international crude oil prices had crossed $100 per barrel, putting additional pressure on Pakistan’s external accounts and increasing concerns about inflation.
According to the governor, nine out of the ten members of the Monetary Policy Committee supported the rate increase.
Ahmad said Pakistan’s inflation rate stood at 7.1% last year, while core inflation had improved over the previous two months. However, higher energy prices and uncertainty surrounding the Middle East conflict continue to pose risks to the economic outlook.
The central bank said its decision was based on the prevailing economic situation and inflation risks. The rate increase could affect borrowing costs, business investment and household finances.
