The State Bank of Pakistan raises its policy rate to 12%, with the overnight interest rate corridor set between 11% and 13%, effective October 27, 2026.

Karachi, October 26, 2026: The State Bank of Pakistan (SBP) has increased its policy rate from 11.50% to 12.00%, effective October 27, 2026, according to a circular issued to the presidents and chief executives of all commercial banks and primary dealers.

Referring to DMMD Circular No. 02, dated April 27, 2026, the central bank announced revised rates for its overnight repo and reverse-repo facilities.

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Under the new arrangements, the SBP overnight reverse-repo rate, which serves as the ceiling of the interest rate corridor, has been fixed at 13.00%, or 100 basis points above the policy rate.

Meanwhile, the overnight repo rate, which represents the corridor’s floor, has been set at 11.00%, or 100 basis points below the policy rate.

Consequently, the interest rate corridor will range between 11.00% and 13.00% per annum, maintaining a total width of 200 basis points.

The SBP stated that it would continue to ensure that the overnight money market rate remained close to the policy rate, which serves as its target rate.

The revised rates will take effect from October 27, 2026. All other instructions relating to the subject will remain unchanged.

The policy rate is a key monetary policy instrument that influences borrowing costs, credit conditions and economic activity. Changes to the benchmark rate can affect financing costs for businesses and consumers, as well as returns on savings and investment decisions.