The SBP policy rate was held unchanged at 10.5 percent on Monday, March 9, 2026 — the second consecutive hold following a surprise decision in January that defied market expectations. With global oil prices rising and regional tensions adding uncertainty to Pakistan’s economic outlook, the Monetary Policy Committee met to decide the SBP policy rate amid growing inflation concerns. Pakistan’s business community called for relief. The central bank did not blink.
Background: SBP Policy Rate History
To understand today’s hold, it helps to understand how far the SBP policy rate has travelled in recent years.
Since mid-2024, the SBP policy rate has been reduced by a total of 11.5 percentage points from a record high of 22 percent. That dramatic easing cycle — one of the sharpest in Pakistan’s monetary history — was driven by a collapse in headline inflation, a stabilising rupee, and improving foreign exchange reserves following Pakistan’s IMF programme.
The SBP policy rate history at a glance:
| Date | Policy Rate | Change |
| Peak (2024) | 22.00% | Record high |
| May 2025 | 11.00% | −100 bps |
| December 15, 2025 | 10.50% | −50 bps |
| January 26, 2026 | 10.50% | Hold |
| March 9, 2026 | 10.50% | Hold |
The SBP policy rate history shows the last cut was 50 basis points announced on December 15, 2025, effective December 16, with the SBP noting inflation remained within the 5 to 7 percent target range.
Details: The March 9 SBP Policy Rate Meeting
SBP Policy Rate Meeting — What the Survey Said
A survey ahead of the SBP policy rate meeting showed 60 percent of participants expected rates to hold, 24 percent foresaw a hike, and just 10 percent anticipated a reduction. That consensus reflected a dramatic shift from two months earlier, when markets had hoped for cuts into single-digit territory.
A Reuters poll of 10 analysts all predicted the SBP policy rate meeting would result in a hold, citing ongoing uncertainties in global energy markets and regional tensions.
Pakistan’s headline inflation rose to 7 percent year-on-year in February 2026 — the highest level since October 2024 — signalling growing inflationary risks. With inflation creeping upward and energy prices under pressure, the case for a cut at the SBP policy rate meeting had effectively evaporated.
SBP Policy Rate — Five Key Reasons for the Hold
1. Rising Global Oil Prices
Developments in the Middle East following US and Israeli attacks on Iran raised concerns about potential disruptions to shipping through the Strait of Hormuz. The resulting surge in global oil and gas prices is expected to directly impact Pakistan’s import costs and inflation outlook — a primary reason behind the SBP policy rate hold.
2. Sticky Core Inflation
While headline inflation stood at 5.6 percent in December 2025, core inflation steadied at a higher level of 7.4 percent. The SBP policy rate meeting consistently flagged core inflation — which strips out food and energy — as a reason to maintain a cautious stance.
3. GDP Growing Faster Than Expected
Real GDP grew by 3.7 percent year-on-year in the first quarter of fiscal year 2026, compared to 1.6 percent in the same period last year. Auto sales, cement dispatches, petroleum products sales, fertiliser off-take, and imports of machinery all recorded notable growth — reducing the urgency for an SBP policy rate cut.
4. FBR Revenue Shortfall
FBR tax revenues grew by only 9.5 percent, well below last year’s pace of 26 percent, resulting in a shortfall of Rs329 billion. This fiscal pressure influenced the SBP policy rate meeting’s cautious approach.
5. Building Foreign Exchange Reserves
The SBP’s foreign exchange reserves are expected to surpass $18 billion by June 2026. The MPC judged that this trajectory, combined with worker remittances, would contain the current account deficit within 0 to 1 percent of GDP — making a hasty SBP policy rate cut unnecessary.
SBP Policy Rate Cut Proposal: What Business Leaders Wanted
The SBP policy rate cut proposal from Pakistan’s industrial and business sectors had been loud and consistent for months.
Saqib Fayyaz Magoon, Chairman of the Businessmen Panel Progressive and Senior Vice President of the FPCCI, warned that persistently high borrowing and energy costs had been inflicting serious harm on industrial output and export competitiveness. His SBP policy rate cut proposal called for a reduction of at least 100 basis points, bringing the rate to single digits without delay.
FPCCI President Atif Ikram Sheikh described the SBP policy rate meeting decision as counterproductive and strictly disappointing.
Backing the SBP policy rate cut proposal further, Treasury bill yields had fallen into single digits for the first time in four years — signalling that markets were already pricing in lower rates. Critics argued that if the market was pricing in cuts, the central bank should follow.
Quotes on the SBP Policy Rate Decision
An analyst at Topline Securities said the SBP policy rate meeting announcement came as a surprise in January, as the majority of participants had been expecting a cut.
Arif Habib Limited had anticipated the SBP policy rate would be cut by 75 basis points to 9.75 percent, signalling a long-awaited return to single-digit territory. Of the 10 analysts surveyed ahead of January’s meeting, seven expected a 50 basis point cut and two saw a deeper 75 basis point reduction.
FPCCI President Atif Ikram Sheikh described the SBP policy rate hold as a major setback to industrial revival, export competitiveness, and economic recovery.
Impact: What the SBP Policy Rate Hold Means for Pakistan
The SBP policy rate hold has direct consequences for businesses, borrowers, and the broader economy.
High borrowing costs continue to weigh on industrial output at a time when Pakistan needs private sector investment to sustain GDP growth. Every month the SBP policy rate remains at 10.5 percent is another month businesses pay elevated interest on loans, suppressing expansion and hiring.
For ordinary Pakistanis, the SBP policy rate hold means mortgage costs, consumer credit, and business loans remain expensive. The SBP policy rate history shows that the 1,150 basis point easing since mid-2024 was supposed to deliver relief — but with the rate now frozen, that relief has stalled.
On the external front, the oil Iran war surge threatens to widen Pakistan’s current account deficit and push inflation above the 7 percent ceiling — making any near-term SBP policy rate cut increasingly unlikely unless the Middle East stabilises.
Conclusion
The SBP policy rate hold at 10.5 percent on March 9, 2026 reflects the central bank’s commitment to price stability over short-term business relief. After cutting rates by 1,150 basis points from a record peak of 22 percent, the SBP policy rate has reached a point where cutting further carries real inflation risk — especially with a war reshaping global energy markets. The next SBP policy rate meeting is expected in May 2026. If oil prices stabilise and inflation stays contained, a 50 basis point cut by mid-year remains plausible. Until then, for Pakistan’s businesses, the wait for single-digit borrowing costs continues.