The Karachi Interbank Offered Rate (KIBOR) recorded a sharp increase across all tenors on Tuesday after the State Bank of Pakistan raised its key policy rate by 100 basis points to 11.50 percent.
The central bank’s decision led to immediate repricing in the money market, with benchmark lending rates moving higher across the board. The biggest jumps were seen in short-term maturities, reflecting tighter liquidity conditions and a swift reaction from banks.
Updated KIBOR rates showed the 1-week tenor rising to 11.88 percent, up 99 basis points, while the 2-week tenor also climbed 99 basis points to 11.89 percent. The 1-month rate increased by 94 basis points to 11.93 percent.
Among medium-term tenors, the 3-month KIBOR rose to 11.79 percent, gaining 50 basis points, while the 6-month rate moved up 43 basis points to 11.87 percent.
Longer-term rates also increased, though at a slower pace. The 9-month tenor rose 34 basis points to 12.26 percent, while the 1-year rate reached 12.30 percent after a 34 basis point increase.
Market analysts said the steep rise in shorter tenors indicates immediate liquidity tightening and aggressive short-term repricing following the SBP’s hawkish monetary stance.
Comparatively smaller increases in longer tenors suggest expectations that interest rates could stabilize in coming policy cycles if external risks and geopolitical pressures ease.
KIBOR had remained relatively stable during recent monetary policy rounds, but the latest increase is expected to push borrowing costs higher across the economy.
Businesses, banks, and consumers are now likely to face more expensive financing in the weeks ahead as lending rates adjust to the new policy environment.
