Policy rate hiked 1pc on ME conflict

In line with market expectations, the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) has raised the policy rate by 100 basis points to 11.50 percent, to address risks to the macroeconomic outlook stemming from the prolonged conflict in the Middle East. The MPC has raised benchmark interest rate for the first time in nearly three years, delivering a larger-than-expected hike as escalating tensions in the Middle East disrupt energy supplies and stoke inflationary pressures. The last increase in the key policy rate was announced in June 2023, when the committee raised it by 100 basis points to an all-time high of 22 percent.