Pakistan's central bank kept its key interest rate unchanged at 11.5% for a third straight meeting on Monday, as a sharp pickup in inflation and lingering risks from the Middle East conflict kept policymakers on hold.
The State Bank of Pakistan (SBP) has held the rate steady since raising it by 100 basis points in April, its first increase in nearly three years, after a surprise 50 bps cut in December 2025, and holds in January and March.
Eight of nine analysts surveyed by Reuters last week expected SBP to maintain the rate at 11.5%, while one had forecast a 50 bps increase to 12%.
Headline inflation jumped to 11.15% year-on-year in August from 9.2% in July, more than tripling from 3.1% a year earlier and moving further above the SBP's 5%-7% medium-term target.
Renewed US-Iran hostilities and the risk of disruption to shipping through the Strait of Hormuz have kept oil prices elevated, adding to import costs in energy-dependent Pakistan.
The South Asian country remains under a $7bn, 37-month IMF Extended Fund Facility, together with a $1.4bn Resilience and Sustainability Facility, with a Fund mission due to conduct reviews for a fourth tranche.
