6-Month KIBOR Down to Roughly 3-Year Low As Inflation Rate Slows

As of January 10, 2025, Pakistan’s benchmark interest rate stands at 11.89 percent, according to the latest data from the State Bank of Pakistan (SBP). The six-month Karachi Interbank Offered Rate (KIBOR) is currently 111 basis points below the SBP’s policy rate of 13 percent.

Topline Securities reports that the central bank’s lending rate has reached a three-year low. Over the past 18 months, it has dropped by half from its peak of 24.68 percent, driven by declining inflation.

In January 2025, the KIBOR rates for three-month, six-month, nine-month, and twelve-month tenures have decreased by 21bps, 23bps, 31bps, and 26bps, respectively.

Sources familiar with SBP operations revealed that banks are offering loans at rates below the benchmark lending rate to meet the government-mandated advance-to-deposit ratio, thereby avoiding additional taxes. While the 15 percent extra tax on bank profits has been removed, the standard corporate tax rate has been raised to 44 percent.