SBP keeps policy rate unchanged at 11.5pc as inflation and oil prices climb

The State Bank of Pakistan (SBP) on Monday decided against another change in interest rates, leaving its key policy rate at 11.5 per cent.

The decision was taken by the central bank’s Monetary Policy Committee (MPC) at its meeting, with the detailed reasons for maintaining the rate expected to be released later.

The decision comes at a time when Pakistan is facing renewed pressure from higher international energy prices. The latest tensions involving the United States and Iran have raised concerns about the movement of oil through the Strait of Hormuz, pushing global crude prices higher.

Higher oil prices are a particular concern for Pakistan because the country depends heavily on imported energy. An increase in global crude prices can raise the cost of imports and add to domestic inflation.

Inflation has already picked up sharply in recent months. Consumer prices rose 11.15pc year-on-year in August, compared with 9.2pc in July. A year earlier, inflation stood at 3.1pc.

The latest figure is also well above the SBP’s medium-term inflation target of 5pc to 7pc.

Weekly inflation has shown a similar trend. The Sensitive Price Indicator (SPI) increased 8.62pc year-on-year during the week ended September 10, with onion and petroleum prices among the main contributors to the increase.