Economic Survey 2025-26 shows SBP’s policy rate remains above most regional and advanced economies despite significant monetary easing

ISLAMABAD: Pakistan remained among the countries with the highest policy interest rates globally despite substantial monetary easing over the past year, according to the Economic Survey of Pakistan 2025-26.

The survey showed that the State Bank of Pakistan (SBP) reduced its benchmark policy rate from 22% in December 2023 to 13% in December 2024. The rate was further lowered to 11% by June 2025, followed by 10.5% between December 2025 and March 2026, before being raised slightly to 11.5% in April 2026.

Although the benchmark rate has fallen sharply from its record high, Pakistan continues to rank among the world’s highest interest rate economies, reflecting the central bank’s efforts to curb inflation, safeguard exchange rate stability and maintain macroeconomic stability.

Türkiye retains the highest policy rate

Among the economies covered in the survey, Türkiye maintained the highest benchmark interest rate at 37% in April 2026, despite a significant reduction from 47.5% in December 2024.

Brazil and Russia also maintained elevated policy rates of 14.5% each in April 2026 as policymakers continued to tackle persistent inflationary pressures.

Pakistan ranked next with a policy rate of 11.5%, placing it among economies pursuing relatively tight monetary policies.

Advanced economies maintain lower borrowing costs

Most advanced economies continued to operate with considerably lower policy interest rates than Pakistan.

• United States: 3.63%

• United Kingdom: 3.75%

• Euro Area: 2.0%

• Canada: 2.25%

• Japan: 0.75%

• Australia: 4.1%

• New Zealand: 2.25%

The comparatively lower rates reflect easing inflationary pressures and more stable macroeconomic conditions in these economies.

Asian central banks keep accommodative stance

Most Asian economies maintained relatively lower interest rates to support economic growth and investment.

• China: 3.0%

• India: 5.25%

• Malaysia: 2.75%

• Indonesia: 4.75%

• Thailand: 1.0%

• South Korea: 2.5%

• Philippines: 4.5%

• Hong Kong SAR: 4.0%

These policy settings remain well below Pakistan’s benchmark rate, highlighting the comparatively tighter monetary stance adopted by the SBP.

Gulf and emerging markets

Among other regional and emerging economies, Saudi Arabia maintained a policy rate of 4.25%, South Africa stood at 6.75%, while Morocco recorded 2.25%.

According to the Economic Survey 2025-26, Pakistan has made substantial progress in easing monetary policy since the emergency rate hikes implemented in late 2023. However, its benchmark interest rate remains significantly higher than those of most regional and advanced economies.

The survey noted that the SBP’s relatively tight monetary policy reflects a cautious approach aimed at containing inflation, preserving exchange rate stability and maintaining positive real interest rates as Pakistan’s economy continues its gradual recovery.