SBP Raises Policy Rate to 12% (October 2026): What It Means for Car and Bike Loans in Pakistan
What Happened: The Key Decision On Monday, 26 October 2026, the State Bank of Pakistan (SBP) Monetary Policy Committee met and raised the country's policy rate by 50 basis points, from 11.5% to 12%. The new rate takes effect from Tuesday, 27 October 2026. Nine of the ten committee members voted in favour of the increase. This is the first time the central bank has raised the policy rate since April 2026. The SBP pointed to rising energy prices and geopolitical tensions, which it said are pushing up inflation risks. The bank's inflation target range remains 5% to 7%. What Is the Policy Rate, in Simple Words? The policy rate is the interest rate at which the central bank lends money to commercial banks. When this rate goes up, borrowing money generally becomes more expensive across the whole economy. Banks often pass at least part of any increase on to their customers through higher mark-up rates on loans, including car and bike financing. That is why a policy-rate decision m...