An overwhelming majority of market participants expect the State Bank of Pakistan (SBP) to leave its benchmark policy rate unchanged at 11.5 percent when the Monetary Policy Committee (MPC) meets on July 27, according to a survey conducted by Topline Securities.
The survey found that 97 percent of respondents expect the central bank to maintain the policy rate at 11.5 percent, while only 3 percent anticipate a 100 basis point cut.
Topline also expects the SBP to keep rates unchanged due to heightened geopolitical uncertainty and the recent rebound in international oil prices despite inflation remaining well contained.
The central bank last reviewed monetary policy on June 15, when it also left the policy rate unchanged at 11.5 percent. Since then, expectations have fluctuated with developments in the Middle East.
Following the 18th June US-Iran memorandum of understanding, easing geopolitical tensions and lower oil prices led markets to price in cumulative rate cuts of 100 to 150 basis points over the next two to three MPC meetings. However, renewed tensions between the two countries have pushed oil prices higher, prompting investors to scale back expectations of an early rate cut.
These changing expectations have also been reflected in Pakistan’s debt market. The six-month Treasury bill yield declined from 12.46 percent before the previous MPC meeting to 11.30 percent in early July before rebounding to around 11.50 percent over the past 10 days. The six-month Karachi Interbank Offered Rate (KIBOR) is currently around 11.67 percent.
Looking beyond the upcoming meeting, respondents were divided over the policy outlook for the rest of the year. About 49 percent expect the policy rate to remain at 11.5 percent by December 2026, while 46 percent foresee further monetary easing. Only 6 percent expect interest rates to increase. Topline Research, however, expects the policy rate to fall below 11.5 percent by the end of the year.
The survey also showed mixed expectations for inflation during FY2026-27. Around 34 percent of respondents expect average inflation to range between 8 and 9 percent, while 31 percent forecast 9 to 10 percent and 29 percent expect 7 to 8 percent.
Topline estimates average inflation will remain between 7 and 8 percent during the fiscal year.
On the currency front, respondents largely expect the Pakistani rupee to remain stable. Nearly half expect the exchange rate to remain between Rs. 280 and Rs. 285 per US dollar by December 2026, while 31 percent forecast a range of Rs. 285 to Rs. 290.
Topline also expects the rupee to trade between Rs. 280 and Rs. 285 against the US dollar by year-end.
Get the latest business news, market insights, and economic updates wherever you prefer.
Add ProPakistani to Preferred Sources and see more of our stories in Google Search and Top Stories.