SBP slashes key policy rate to 10.5pc

Karachi: Contrary to market expectations, the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) decided to reduce the policy rate by 50 basis points (bps) to 10.5% on Monday.

The market expected the central bank to maintain the status quo.

“The MPC has decided to decrease the policy rate by 50bps to 10.5% w.e.f. December 16, 2025,” the central bank said.

The latest reduction takes the total easing since rates peaked at 22% to 1,150 basis points. The policy rate had remained unchanged for four consecutive meetings before Monday’s move.

Monetary Policy Committee has decided to decrease the policy rate by 50 basis points to 10.5 percent w.e.f. December 16, 2025.
For details: https://t.co/IJWSZOLVeB#SBPMonetaryPolicy pic.twitter.com/QJDV7nNB5X

— SBP (@StateBank_Pak) December 15, 2025

Last cut of 100bps was announced in the May 05, 2025, meeting.

The MPC, in its statement, noted that inflation on average remained within the target range of 5–7% during July-November FY26, though core inflation is proving to be relatively sticky.

“On balance, the inflation outlook remains broadly unchanged, mainly owing to the relatively benign global commodity prices and anchored inflation expectations, amidst a prudent monetary policy stance.