The State Bank of Pakistan (SBP) on Monday decided to increase the policy rate by 100 basis points (bps) to 11.50%.

A decision to this effect was taken at the SBP’s Monetary Policy Committee (MPC).

The decision was in line with market expectations, which anticipated the central bank to raise the rates in the wake of escalating geopolitical tensions in the Middle East.

The ongoing Iran war has caused fuel prices to surge, raising fears of a new wave of inflation.

The MPC in its last meeting on March 9 kept its benchmark policy rate unchanged at 10.5%.