On Monday, 26 October 2026, the State Bank of Pakistan’s Monetary Policy Committee will meet to decide the country’s main interest rate. This sounds like a technical event for bankers only. In reality, it affects almost everyone — savings profits, loan costs, and, very directly, share prices at the Pakistan Stock Exchange.
Where Rates Stand Right Now
Interest rates are simply the price of money. When the State Bank raises its policy rate, borrowing becomes expensive and saving becomes more rewarding. When it cuts the rate, the opposite happens.
The market’s own rates tell a story. On 22 October, KIBOR — the Karachi Interbank Offered Rate, the rate banks charge each other for short-term money and a guide for many business loans — stood at 11.76 to 12.01 percent for three months, 12.18 to 12.43 percent for six months, and 12.26 to 12.76 percent for twelve months.
Government borrowing rates point the same way. In the Treasury bill auction on 14 October, the cut-off rates — the highest return the government accepted — were 12.00 percent for three months, 12.40 percent for six months, and 12.50 percent for twelve months. The ten-year Pakistan Investment Bond cut-off, set on 18 September, was also 12.50 percent. In simple words, money in Pakistan today costs around twelve percent a year.
Why Oil Has Changed the Conversation
A few weeks ago, many commentators were hoping for stability or even a small cut. The sharp rise in oil has changed that mood. Brent crude settled at $113.17 a barrel on Thursday, up 4.00 percent in one day and about 86 percent higher since the start of 2026, with Middle East tensions pushing prices to a five-month high.
Pakistan imports most of its oil, so expensive oil feeds into petrol prices, transport costs, and then almost every daily item. That is inflation — the steady rise in general prices. Because controlling inflation is the State Bank’s main job, commentators now say a rate increase is being watched as a real possibility.
What a Rise or a Hold Would Mean for Shares
If the State Bank raises rates, bank shares often react first. Banks can earn more from loans and government papers, but very high rates can also slow business and make some loans harder to repay. Companies that borrow heavily, including many cement and industrial firms, face higher costs, which can reduce profits.
Higher rates also make fixed deposits and government bills more attractive than shares. Some money leaves the stock market for these safer returns — one reason share prices often soften when rates rise.
If the State Bank holds the rate unchanged, the market may read it as confidence that inflation can be controlled without further tightening. That would support share prices, especially after Thursday’s sharp fall, when the KSE-100 closed at 163,924.31, down 2,006.67 points.
Whatever the decision, the statement that comes with it matters as much as the number. Investors will read the State Bank’s words about oil, inflation, and the rupee very carefully on Monday.
Market data: Pakistan Stock Exchange, State Bank of Pakistan and published news reports (figures as of 22 October 2026). Written in our own words for information only — not investment advice.