SBP rate decision on 26 October: policy rate expected to stay at 11.5%, no relief for loans yet

The State Bank of Pakistan's next interest rate decision is due on 26 October 2026, and analysts expect the policy rate to stay at 11.5%, Dawn reported on 4 October. For anyone with a car loan, a home loan or a running finance line, that means no relief on monthly instalments this month, and possibly a small rise.

The numbers behind the decision

Inflation has eased, but at 10.3% it is still above the policy rate, and well above the 5% to 7% target. Yields in last week's T-bill auction rose by up to 75 basis points, a sign that banks expect rates to stay high. Tresmark chief executive Faisal Mamsa told Dawn that the authorities reportedly expect inflation to average around 7.5% if oil falls back towards $80 a barrel, and around 8.2% if it stays near $100.

Why a cut is unlikely on 26 October

• Oil. Fuel prices are set daily and petrol is at Rs 392.76 a litre (PSO ex-depot Karachi), up from Rs 266 in early March. Every rise feeds into transport and food costs.
• Real rate. With inflation at 10.3% and the policy rate at 11.5%, the real rate is only about 1.2 percentage points. Cutting now would push it close to zero.
• Market pricing. KIBOR at 12.64% sits above the policy rate, and banks price most consumer loans off KIBOR, not the policy rate.

What it means for your loan

Most car and home loans in Pakistan reset to KIBOR plus a bank's spread every six or twelve months. If your loan resets in November or December, use today's KIBOR, not the rate on your original offer letter.

Example: on a Rs 3 million car loan over five years, every 1 percentage point on the rate adds roughly Rs 1,500 to Rs 1,600 (at rates between 12% and 17%) to the monthly instalment. Put your own figures into our car loan calculator, home loan calculator or personal loan calculator to see your reset.

What it means for savers

High rates keep returns on savings up. National Savings profit rates were revised on 1 October; see what Behbood and other schemes now pay and work out your monthly profit with the National Savings calculator.

We will update the policy rate page on 26 October as soon as the SBP announces its decision.