Market split between status quo and rate hike ahead of SBP monetary policy meeting on June 15

Market participants remain divided over the State Bank of Pakistan’s (SBP) upcoming monetary policy decision, with an equal share of respondents expecting either a status quo or a rate hike, according to a survey conducted by Topline Securities ahead of the central bank’s June 15 meeting.

The SBP is scheduled to hold its fourth Monetary Policy Committee (MPC) meeting of 2026 on June 15. Topline Research said it expects the central bank to keep the policy rate unchanged at 11.5%.

According to the survey, 49% of respondents expect the policy rate to remain unchanged. Another 49% anticipate an increase, including 34% who expect a 50-basis-point hike and 15% who foresee a 100-basis-point increase. Only 2% of respondents expect a rate cut of up to 50 basis points.

The brokerage attributed the split outlook primarily to volatility in global oil prices. It said its expectation of a status quo is based on diplomatic efforts by parties involved in the Middle East conflict, active mediation by Pakistan and repeated assurances by US President Donald Trump regarding an early resolution of the war.

Brent crude, which reached as high as $118 per barrel on April 29, is currently trading near $93 per barrel and has remained below $100 over the past two weeks.

In the previous MPC meeting held on April 27, the SBP raised the policy rate by 100 basis points, in line with market expectations. A previous Topline poll had shown that 53% of participants expected the increase, citing heightened US-Iran tensions at the time.

Topline noted that current secondary market yields indicate expectations of a smaller increase. The six-month Treasury bill yield and six-month Karachi Interbank Offered Rate (KIBOR) are currently trading at 12.42% and 12.50%, respectively, up 92 basis points and 106 basis points since the April monetary policy announcement.

According to the brokerage, prevailing market yields are pricing in a rate hike of between 50 and 75 basis points.

The survey also gauged expectations for interest rates, inflation and the exchange rate through the end of 2026 and FY27.

On policy rates, 53% of respondents believe the benchmark rate will remain above 11.5% by December 2026. Another 31% expect it to stay at the current level of 11.5%, while 16% foresee rates falling below that level.

Inflation expectations for FY27 were also mixed. Twenty per cent of respondents expect average inflation to exceed 10%, while 30% forecast inflation in the 9% to 10% range. Another 26% expect inflation between 8% and 9%, while 20% foresee inflation averaging between 7% and 8%. Only 5% expect inflation to fall below 7%.

Topline Research projects an average inflation of 8% to 8.5% during FY27.

On the currency outlook, 39% of participants expect the rupee to trade between Rs285 and Rs290 against the US dollar by the end of FY27. Another 36% see the exchange rate remaining in the Rs280-Rs285 range, while 15% expect the rupee to strengthen further to between Rs275 and Rs280 per dollar. Only 7% anticipate the exchange rate moving beyond Rs290.

The brokerage firm said the survey points to expectations of a broadly stable rupee, with the firm forecasting the currency to trade between Rs283 and Rs286 per dollar by December 2026.