🏦 Quick answer: SBP's next monetary policy decision is due on 26 October 2026. The policy rate is 11.5%, where it has been since a surprise 100 basis point hike on 27 April. September inflation fell to 10.3%, which leaves the rate only about 1.2 points above inflation. SBP has said it wants inflation back in its 5–7% range, so the data points more towards a hold than a cut. Every 1 point change moves the monthly instalment on a Rs10 million home loan by about Rs7,500.
Key facts
- Next decision: 26 October 2026, by SBP's Monetary Policy Committee (MPC).
- Policy rate: 11.5%, up from 10.5% on 27 April 2026. It was SBP's first hike in almost three years.
- Since then: held in June, on 27 July and on 14 September 2026.
- Inflation: 10.26% in September 2026, down from 11.15% in August. SBP's medium-term target is 5–7%.
- Real interest rate: about +1.2 percentage points (11.5% minus 10.26%).
- Background: the Middle East conflict and higher oil prices, plus a pending IMF board approval for about $1.2 billion.
On this page
When Is the Next SBP Monetary Policy Decision?
26 October 2026. That's the next scheduled meeting of the State Bank of Pakistan's Monetary Policy Committee (MPC), which sets the policy rate: the benchmark that every other interest rate in Pakistan follows. SBP publishes the decision and a Monetary Policy Statement explaining it on sbp.org.pk the same day, and the governor usually holds a press conference afterwards. SBP says it will announce a new date if something unexpected affects a scheduled meeting.
A change usually takes effect the next working day. The April hike, for example, was announced on Monday 27 April and applied from Tuesday 28 April.
| Detail | Value |
|---|---|
| Decision date | 26 October 2026 |
| Current policy rate | 11.5% |
| Last change | +100 bps on 27 April 2026 (10.5% → 11.5%) |
| Last decision | Hold, 14 September 2026 (third hold in a row) |
| Latest inflation | 10.26% year-on-year (September 2026) |
| SBP inflation target | 5–7% over the medium term |
| Real interest rate | About +1.2 percentage points |
How Did the Policy Rate Get to 11.5%?
By falling a long way, then rising once. SBP spent mid-2024 to late 2025 cutting the rate from a record 22% to 10.5%, a total of 1,150 basis points, as inflation collapsed. Then the war in the Middle East sent oil prices up and SBP reversed course (Dawn).
| When | What happened |
|---|---|
| June 2024 | Easing cycle begins from a record 22% policy rate. |
| Late 2025 | Cuts reach 10.5%, 1,150 bps below the peak. |
| February 2026 | War involving Iran, Israel and the US; shipping through the Strait of Hormuz is disrupted and oil prices jump. |
| March 2026 | Inflation rises to 7.3%, above SBP's 5–7% range. |
| +100 bps to 11.5%, the first hike in almost three years. | |
| June 2026 | Hold at 11.5%. |
| Hold at 11.5%. June inflation was 11.1%. | |
| Hold at 11.5%. August inflation was 11.15%. | |
| Next decision. |
When it raised the rate in April, the MPC said the "prolonging of the Middle East conflict has intensified risks to the macroeconomic outlook", and warned that the supply shock "may push inflation to double digits in the coming months". It was right: inflation passed 10% by the summer. The hike surprised the market. Brokerage previews, including Arif Habib's, had argued for a hold at 10.5%, and business groups criticised the move. For the background on how the war reached Pakistan's fuel prices, see our explainer on why the Iran-US war is hitting Pakistan's fuel prices.
What Is Inflation Doing Now?
Falling, but slowly, and from a high level. The Pakistan Bureau of Statistics put September 2026 CPI inflation at 10.26%, down from 11.15% in August and at the bottom of analysts' 10.25–10.75% forecast range (Business Recorder).
| Month (2026) | CPI inflation, year-on-year |
|---|---|
| March | 7.3% |
| May | 11.7% |
| June | 11.1% |
| August | 11.15% |
| September | 10.26% |
Three details matter more than the headline:
- Prices are still rising fast month to month. They rose 1.3% in September alone, slightly faster than August's 1.2%. The yearly rate fell mainly because prices had jumped by about 2% in September 2025, so this year's figure is compared against a higher base.
- Core inflation is sticky. Urban core inflation, which strips out food and energy, was about 8.6% in September. It was 8.8% in August and 7.0% a year earlier.
- SBP itself expects a slow decline. In July it said inflation would stay above target "over the next few months" and would "ease gradually and stabilise near the upper bound of the 5% to 7% target range by June 2027" (The News).
📐 The real interest rate: policy rate minus inflation = 11.5% − 10.26% ≈ +1.2 points. That's a thin cushion. A cut to 11% would leave less than one point. Central banks fighting inflation usually want this gap clearly positive, which is the main argument against cutting now. Our guide to Pakistan's inflation explains why it matters for your money.
What Other Signals Will SBP Weigh?
- Oil and the Middle East. This is the single biggest swing factor. Pakistan imports most of its fuel, so renewed tension pushes up import bills and inflation, and calm does the opposite. In July SBP said the outlook had improved but remained exposed to the renewed US-Iran conflict.
- The IMF programme. Pakistan reached a staff-level agreement on the fourth review of its Extended Fund Facility and the third review of its Resilience and Sustainability Facility. That's about $1 billion plus $210 million, subject to IMF board approval (Express Tribune). Board approval would add to reserves and confidence, which gives SBP a little more room either way.
- Growth. Real GDP grew about 4% in the first three quarters of FY26, and the IMF estimates 3.6% for the full year. A weaker economy strengthens the case for a cut.
- Government borrowing costs. In the latest Pakistan Investment Bond auction, reported on 11 October, yields on three-, five- and 10-year bonds rose 26–41 basis points. National Savings profit rates were also nudged up on 1 October (see below). Neither looks like a market expecting a big cut soon.
Hold, Cut or Hike: Three Scenarios for 26 October
No brokerage survey for this meeting had been published by 12 October. These are the three possible outcomes and the case for each. This is our reading of public data, not a forecast or investment advice.
| Scenario | The case for it | The case against it |
|---|---|---|
| Hold at 11.5% | Inflation (10.3%) is still far above the 5–7% target. SBP said in July its stance "remains appropriate". The real rate is thin. Oil risks are unresolved. | Inflation has fallen two months in a row, and growth is slowing. |
| Cut (e.g. 50 bps to 11%) | Headline inflation is trending down, business groups want cheaper credit, and growth is soft. | It would leave the real rate under 1 point. Monthly price rises are still about 1.3%, and the IMF wants tight policy. |
| Hike | Only likely if oil spikes again or the rupee comes under pressure before the meeting. | Inflation is easing, and SBP has held three times since April without signalling more tightening. |
Our read: on the data published so far, a hold fits SBP's own guidance best. A cut becomes more likely if oil prices fall meaningfully before 26 October or October's early price data come in soft. We'll update this page after the decision.
What Does the Decision Mean for Your Loans?
If your loan is KIBOR-linked, the policy rate reaches your instalment at the next reset date. Most bank home loans in Pakistan, and many car loans, charge KIBOR plus a fixed spread. KIBOR is the rate banks quote to lend to each other, and it moves closely with the policy rate. Your loan agreement says how often your rate resets, usually every 6 or 12 months. Fixed-rate loans don't change.
Here's what a 1 point move does to two typical loans:
| Loan | Rate 1 pt lower | Rate today (example) | Rate 1 pt higher |
|---|---|---|---|
| Car loan: Rs3,000,000 over 5 years | 14%: Rs69,805/month | 15%: Rs71,370/month | 16%: Rs72,954/month |
| Home loan: Rs10,000,000 over 20 years | 15%: Rs131,679/month | 16%: Rs139,126/month | 17%: Rs146,680/month |
Over the full term of that home loan, 1 point is worth about Rs1.8 million in total interest either way. A 50-basis-point cut would be roughly half of these differences. Put your own loan into our EMI calculator to see your numbers.
What Does It Mean for Your Savings?
Savers have done reasonably well since April. With the policy rate above inflation, bank deposits, National Savings and money market funds have been paying slightly more than prices are rising, before tax. A cut lowers those returns over the following weeks and months. A hold keeps them where they are.
National Savings rates were revised on 1 October 2026, mostly upwards (Profit):
| National Savings scheme | New rate | Change |
|---|---|---|
| Behbood Savings Certificates / Pensioners' Benefit Account | 12.72% | +12 bps |
| Special Savings Certificates & Accounts | 11.82% | +74 bps |
| Defence Savings Certificates | 11.80% | +19 bps |
| Regular Income Certificates | 11.76% | +60 bps |
| Sarwa Islamic Term Account (5-year) | 11.70% | +54 bps |
| Sarwa Islamic Term Account (3-year) | 11.57% | +41 bps |
These rates are reviewed regularly and follow government bond yields, so they can move again after 26 October. Confirm current rates on savings.gov.pk before you invest. A useful rule of thumb: every 1 point of return on Rs1,000,000 is Rs10,000 a year before tax. If you expect rates to fall, locking in a longer-term certificate at today's rate protects that return. If you expect them to stay high, short-term products let you roll over at similar rates. Our National Savings vs mutual funds comparison covers the trade-offs, and the savings calculator shows how returns compound.
What Does It Mean for Stocks and Mutual Funds?
- Stocks: the KSE-100 closed the week to 9 October at 167,089, down 0.6% on the week. Geopolitical worries offset optimism about the IMF deal. Rate cuts usually support Pakistani equities, because deposits and government paper become less attractive and companies' borrowing costs fall. A longer hold usually caps that. Our KSE-100 explainer covers how the index works.
- Money market and cash funds: their returns track short-term rates closely, so they fall within weeks of a cut and stay put on a hold.
- Income and sovereign funds: they hold longer-dated government paper, whose prices rise when rates fall. They tend to benefit most from the start of a cutting cycle, and lose some of that gain if cuts are delayed.
- Equity funds: they move with the stock market, as above. If you invest monthly, the SIP calculator shows how steady contributions smooth out these swings.
What Should You Do Before 26 October?
- Check your loan's terms. Find whether it's fixed or KIBOR-linked and when it next resets. That tells you when any change will reach your instalment.
- Don't bet your plan on a single decision. Even if SBP cuts, a 50 bps cut on a Rs10 million home loan saves about Rs3,700 a month. That's helpful, but it won't change your plan. Budget for today's rate.
- Keep your emergency fund in something liquid. Money market funds and savings accounts adjust to rate changes on their own, so you don't need to time them. See our emergency fund guide.
- Compare savings options on after-tax, after-inflation returns. A 12% return taxed at 15% and set against 10% inflation leaves very little real gain. Our inflation calculator shows what your money will actually be worth.
- Watch sbp.org.pk on 26 October. The Monetary Policy Statement explains the decision, and its outlook paragraph is the best guide to what SBP might do next.
Sources
This article uses SBP decisions and statements as reported in the press, Pakistan Bureau of Statistics inflation data, and news reports up to 12 October 2026. Loan examples are illustrations, not quotes from any bank. Nothing here is investment advice.
- Dawn: Central bank increases policy rate by 100bps to 11.5pc
- The News: SBP holds key policy rate at 11.5% as US-Iran hostilities raise inflation risks
- Business Recorder: Sept CPI inflation up 10.3pc YoY
- Profit: National Savings raises profit rates by up to 74bps
- The Express Tribune: PSX gives up gains despite IMF deal
- Trading Economics: Pakistan interest rate
- State Bank of Pakistan