SBP Holds Rate at 11.5% as Inflation Stays Stubborn

SBP Holds Rate at 11.5% — Inflation Above Target Constrains Easing

Key Takeaways

SBP’s Monetary Policy Committee (MPC) kept the policy rate unchanged at 11.5% on June 15, 2026
This follows the surprise 100 bps hike from 10.5% to 11.5% on April 27, 2026 — the first increase since June 2023
May CPI inflation at 11.7% exceeds the SBP’s 5–7% medium-term target significantly
SBP described its current stance as “appropriate to guide inflation toward 5–7% over the medium term”
The June 15 meeting was the final MPC meeting of FY 2025-26
Markets were nearly evenly split (49%/49%) between a hold and another hike ahead of the decision

Why SBP Held — Not Cut

For much of 2024 and early 2025, the SBP was on an aggressive easing cycle, cutting rates from a peak of 22% in June 2023 down to 10.5% by early 2026. That easing cycle was paused — and briefly reversed — when inflation started picking up.

The SBP’s rate history:

Date	Rate	Change
June 2023	22%	Peak (historic high)
Jan 2025	13%	After 900 bps of cuts
March 2026	10.5%	Near-cycle low
April 27, 2026	11.5%	+100 bps surprise hike
June 15, 2026	11.5%	Held unchanged

The April 2026 hike surprised markets — it was the first rate increase in nearly three years and came despite signs of economic stabilisation. The SBP cited resurgent inflation, high global oil prices (before the June fuel cuts), and the need to anchor expectations.

Key Points from the June MPC Statement

Inflation outlook: CPI expected to remain above target in the near term before easing toward 5–7% by mid-FY27
Growth: Real GDP growth of ~3.2% estimated for FY26 — broadly in line with projections
External sector: Record remittances and IMF disbursements provide buffer; current account in surplus
Fiscal: Primary surplus maintained; budget deficit within IMF-agreed targets
Global risks: Oil price uncertainty remains the key external risk; US-Iran tensions monitoring

The MPC statement emphasized that “the current monetary policy stance remains appropriate” — signalling neither an imminent cut nor a further hike is the base case as of June 2026.

What This Means for Borrowers

The 11.5% policy rate is the benchmark for lending rates across the banking system. Typical consumer loan rates sit 3–5 percentage points above the policy rate:

Loan Type	Approx. Rate (June 2026)
Home finance (conventional)	18–21%
Home finance (Islamic)	16–19%
Car finance (conventional)	19–22%
Personal loan	22–26%
Business loan	18–22%

Borrowers hoping for rate cuts before the end of 2026 should watch August’s MPC meeting — if inflation begins trending down following the June petrol price cuts, a cut remains possible.

Use our Loan EMI Calculator to calculate monthly payments at current rates.

Impact on National Savings Schemes

NSS profit rates are periodically revised and loosely track the policy rate. With the rate held at 11.5%, NSS rates are likely to remain stable. Check National Savings (cdns.gov.pk) for the latest announced profit rates.

Frequently Asked Questions

Why did SBP raise rates in April 2026 after cutting for two years?

Rising inflation (from around 8% in early 2026 to 11.7% by May 2026) and uncertainty around global oil prices prompted the MPC to take a precautionary step. The 100 bps hike was meant to signal commitment to the inflation target.

When will the SBP start cutting rates again?

This depends on inflation. If the June 20 petrol price cut (Rs. 74/litre) feeds through to CPI, May’s 11.7% reading could represent a peak. The next MPC meeting is expected in late July/August 2026 — the first of FY 2026-27.

How does the policy rate affect my savings account?

Banks typically offer savings rates of 50–75% of the policy rate. At 11.5%, most bank savings accounts pay 6–9% annually. NSS schemes generally offer higher rates — check current rates at cdns.gov.pk.

Based on SBP Monetary Policy Statement, June 15, 2026. For educational purposes only, not financial advice.