The State Bank of Pakistan’s Monetary Policy Committee (MPC) is set to hold its fourth meeting of the year on Monday, with analysts offering differing views on whether interest rates will rise again or remain unchanged.
The committee last met on April 27, when it increased the benchmark policy rate by 100 basis points to 11.5 percent. The move was largely in line with market expectations at the time.
Ahead of the latest meeting, investors and economists remain divided over the central bank’s next step, reflecting uncertainty over inflation trends and developments in global energy markets.
According to a survey conducted by Topline Securities, 49 percent of respondents expect the MPC to keep the policy rate unchanged at its June 15 meeting. An equal proportion anticipates another increase.
Among those expecting a hike, 34 percent believe the central bank will opt for a 50 basis point increase, while 15 percent forecast a larger 100 basis point rise. Only 2 percent of respondents expect a reduction of up to 50 basis points.
Topline Securities said the mixed outlook was mainly linked to fluctuations in international oil prices.
“The uncertainty surrounding rate expectations is primarily driven by high volatility in oil prices,” the brokerage house said. It added that its expectation of no change in rates was supported by diplomatic efforts aimed at easing regional tensions.
The Pakistan Institute of Development Economics (PIDE) also pointed to a cautious stance among market participants.
In its assessment, PIDE noted that while opinions remain split between maintaining the current rate and introducing a modest increase, recent developments have lowered the chances of another hike.
“Recent commentary suggests that, while views remain divided between status quo and a modest hike, easing oil price and geopolitical pressures have reduced the probability of another increase,” the institute said.
However, it warned that inflation concerns had not disappeared entirely.
“Still elevated inflation and expectation risks make a rate cut premature,” PIDE added.
The latest policy meeting comes as investors closely monitor international developments that could influence Pakistan’s inflation outlook, particularly changes in global oil prices.
Early on Monday, Prime Minister Shehbaz Sharif said on social media that the United States and Iran had reached an agreement to end their conflict and would formally sign the deal in Switzerland on Friday.
According to the prime minister, the agreement calls for the “immediate and permanent termination of military operations on all fronts, including in Lebanon”.
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