SBP raises policy rate by 100bps to 11.5% over economic risks

KARACHI: The State Bank of Pakistan on Monday increased its benchmark policy rate by 100 basis points to 11.5%.

The central bank said the decision was taken because of growing risks to the economy caused by the ongoing US-Israel war on Iran.

According to the bank, global energy prices, freight charges, and insurance costs are still much higher than they were before the conflict began.

It also said supply chain disruptions have added to uncertainty in the market.

The State Bank warned that the effects of these global developments may be seen in Pakistan’s key economic indicators in the coming months.

The Monetary Policy Committee said inflation is likely to rise and remain above the target level for the next few quarters.

Because of this, the committee decided to keep monetary policy tight to control inflation and reduce the impact of supply shocks.

The central bank added that maintaining economic stability is important for achieving sustainable long-term growth in the country.