SBP maintains policy rate at 10.5pc
The State Bank of Pakistan (SBP) on Monday maintained its key policy rate at 10.5 per cent.
The announcement was posted on the central bank’s X account. A formal statement by the Monetary Policy Committee is awaited.
Analysts had widely expected the policy rate to remain unchanged, with Topline Securities noting that the decision was in line with their expectations.
A Reuters poll conducted earlier this month also indicated a consensus for a hold, as rising global energy prices and escalating regional tensions cloud the inflation outlook and limit the central bank’s room for further cuts.
All 10 analysts surveyed by Reuters anticipated that the State Bank of Pakistan would keep the policy rate at 10.5 per cent, after policymakers maintained the rate at the same level in January.
The State Bank has cut the key rate by a cumulative 1,150 basis points since mid-2024, from a record 22pc in 2023, as inflation cooled sharply from multi-decade highs.
Pakistan has begun to feel the economic fallout of the escalating conflict between the US-Israel against Iran, which has led to the closure of the Strait of Hormuz and triggered a sharp rise in global fuel prices.
In international markets, Brent crude is on track for a record one-day gain, as mounting geopolitical tensions place severe pressure on global energy supplies. Meanwhile, gold fell 2pc.
Prime Minister Shehbaz Sharif is expected to unveil an austerity plan on Monday in response to the unfolding global fuel crisis.
Last week, the government raised the prices of petrol and high-speed diesel by Rs55 per litre, the largest single increase on record, as the country began absorbing the first direct economic shocks of the ongoing regional conflict.
Additional input from Reuters