Pakistan's central bank kept its key policy rate unchanged at 10.5 percent. The decision came amid growing economic uncertainty driven by a sharp rise in global oil prices. The Strait of Hormuz remained largely closed, a critical chokepoint for oil shipments, while escalating US threats against Iran further unsettled energy markets. The central bank cited these volatile conditions as the primary reason for maintaining the high borrowing cost. This move aims to curb inflation but risks slowing economic growth as energy costs feed through to businesses and consumers.

Oil prices surged globally following the closure of the Strait of Hormuz and heightened geopolitical tensions. Pakistan, heavily reliant on imported oil, faces increased import bills and potential fuel shortages. The central bank's decision reflects a delicate balance between controlling inflation and supporting an economy already strained by a large current account deficit and slowing growth. The uncertainty surrounding energy supplies and prices is expected to weigh heavily on the nation's economic outlook for the foreseeable future.

For investors and businesses, the 10.5% rate signals continued pressure on borrowing costs and economic activity. The central bank's warning about the oil price shock underscores the vulnerability of emerging markets to geopolitical events. The situation remains fluid, with the potential for further rate hikes if oil prices remain elevated or the Strait of Hormuz closure persists, adding another layer of risk to Pakistan's already challenging economic environment.