The State Bank of Pakistan (SBP) is widely expected to hold interest rates steady. A Reuters poll of 12 analysts predicts the central bank will keep the policy rate at 11% on Monday, following the International Monetary Fund (IMF) warning that inflation risks persist. The IMF stated monetary policy must remain “appropriately tight” to anchor expectations.
All twelve analysts surveyed forecast no rate cut in the upcoming meeting. A majority expect inflation to hover between 6% and 8% in the near term. They predict a rise towards the end of fiscal year 2026 as temporary factors fade. Food and transport price volatility, exacerbated by recent floods, will sustain price pressures.
Most respondents have pushed back their forecasts for monetary easing. They now believe the SBP will not begin cutting rates until the closing months of FY26 (around mid-2026). Some analysts have even shifted their predictions for the first cut into fiscal year 2027, which begins in July 2026.
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The IMF reinforced this cautious stance in its latest review. It noted the SBP has maintained positive real interest rates on a forward-looking basis. The Fund stated this tight policy was pivotal in reducing inflation from its 2023 peak near 40%. It should continue to ensure price stability and rebuild foreign exchange reserves.
Inflation has begun to accelerate again after months of decline. Headline inflation eased slightly to 6.1% in November from 6.2% in October. However, it remains above the SBP’s target range of 5–7%. The IMF expects inflation to temporarily accelerate to 8–10% this fiscal year before stabilising.
Analysts warn that the economic recovery remains fragile and sensitive to external pressures. A premature rate cut could pressure the Pakistani Rupee, even with expected IMF inflows. The central bank received a $1.2 billion disbursement this week to bolster reserves. The SBP has held its policy rate at 11% since September 2025, following aggressive cuts totalling 1,100 basis points in the prior year.
