EL7.AI
StocksMedium•27 October 2026•
3 min read

Pakistan Raises Interest Rate to 12% as Stocks and Oil Fall Ahead of Decision

Key Facts

1The State Bank of Pakistan raised its policy rate from 11.50% to 12.00%, effective October 27, 2026.
2The bank set the corridor ceiling at 13.00% and the floor at 11.00%, with a width of 200 basis points.
3Consumer inflation was 10.3% in September, compared with 11.1% in August and 5.8% in September 2025.
4West Texas Intermediate crude futures fell 2.16% to $101.04 a barrel, and Brent fell 1.89% to $114.51 on October 26.
5The World Bank projected real growth of 3.8% and inflation of 8.2% for Pakistan in fiscal year 2026-27.

The State Bank of Pakistan raised its policy rate from 11.50% to 12.00%, effective October 27, 2026, according to a bank circular. The decision followed the bank’s decision to hold the rate unchanged at 11.5% at its previous meeting on September 14. On October 26, the KSE-100 closed higher, according to a Business Recorder report, which described trading as choppy and sentiment as cautious ahead of the decision. The available evidence does not provide verified figures for the index’s gain during the October 27 session. Nor do sources establish that the previous session’s stock gains resulted from the rate decision, which took effect the following day.

The bank also set the overnight interest rate corridor at 200 basis points. It set the ceiling at 13.00% and the floor at 11.00%, effective October 27. The range brackets the new 12.00% policy rate, providing the operating levels announced by the bank alongside the main rate adjustment. The previous rate of 11.50% dates to the decision the central bank left unchanged in September. The change thus combines an increase in the main rate with the setting of the corridor ceiling and floor as it takes effect.

On prices, consumer inflation in Pakistan was 10.3% year over year in September 2026, compared with 11.1% in August, according to the Pakistan Bureau of Statistics. While inflation eased from the previous month, it remained above its 5.8% level in September 2025. That puts the September reading between a monthly slowdown and an annual increase compared with the previous year. In its forecasts for fiscal year 2026-27, the World Bank projected real growth of 3.8% and headline inflation of 8.2%. The bank said growth would remain modest as energy prices continued to rise.

Oil futures fell on October 26, according to a Profit by Pakistan Today report published at 0426 GMT. West Texas Intermediate crude futures fell 2.16% to $101.04 a barrel, while Brent futures declined 1.89% to $114.51. The coverage links the Pakistani market’s sensitivity to energy risks with the rate decision, but the evidence does not attribute the previous session’s stock gains to the fall in oil. Nor does it establish that the decline in crude prompted buying in energy, cement or banking stocks. Oil’s move therefore remains a separate figure from any explanation of stock performance.

In its October update, the International Monetary Fund said risks to Pakistan’s economic outlook included geopolitical tensions, volatile energy prices, tighter global financial conditions and trade disruption. These risks come as the World Bank projects modest growth for the country in fiscal year 2026-27, with energy costs still rising. The World Bank puts its growth and inflation forecasts at 3.8% and 8.2%, respectively. The new rate decision took effect on October 27, following the September hold. The available evidence did not include a date for a subsequent monetary policy meeting or a formal next forecast.