The State Bank of Pakistan (SBP) is widely expected to keep interest rates steady at 11% on Monday, according to a Reuters poll, as analysts delay predictions for rate cuts to late 2026 following IMF warnings that inflation risks remain and monetary policy must stay “appropriately tight.”
All 12 surveyed analysts anticipate no change in the upcoming policy meeting. Most project inflation to remain between 6% and 8% in the near term, before rising again toward the end of fiscal 2026 due to fading base effects and continued volatility in food and transport prices from flood-related supply disruptions.
The majority now expect the central bank to begin easing rates only in the final months of FY26 (ending June 2026), with some analysts extending the first expected cut into FY27, starting July 2026.
The IMF, in a second review released on Thursday, said monetary policy needs to remain “appropriately tight and data-dependent” to keep expectations anchored and noted that the SBP had maintained positive real interest rates on a forward-looking basis.
It said the tight stance had been pivotal in reducing inflation and should be maintained to ensure price stability and support the rebuilding of external buffers.
Analysts said these risks, along with the SBP’s preference for maintaining positive real interest rates, would keep policymakers cautious.
The SBP has held its policy rate at 11% since September, after cutting it by 1,100 basis points between June 2024 and May 2025 as inflation fell sharply from highs near 40% in 2023.
Source: Express Tribune
