SBP expected to keep policy rate unchanged at 11.5% on July 27: survey

Around 97% of market participants expect the State Bank of Pakistan to keep its policy rate unchanged at 11.5% at the Monetary Policy Committee (MPC) meeting scheduled for July 27, according to a survey by Topline Securities. 

The remaining 3% anticipate a reduction of 100 basis points.

The brokerage firm also expects the central bank to maintain the existing rate, citing renewed geopolitical uncertainty and the recent rise in international oil prices despite contained domestic inflation.

The SBP had kept the policy rate unchanged at 11.5% at its previous meeting on June 15. In Topline’s survey at that time, 49% of respondents had expected no change.

Expectations of monetary easing had strengthened after the US-Iran Memorandum of Understanding (MoU) signed on June 18 lowered geopolitical risks and softened oil prices. Markets had begun pricing cumulative rate cuts of 100 to 150 basis points over the following two to three policy meetings.

However, renewed US-Iran tensions over the past two weeks and the rebound in oil prices have reduced expectations of an immediate rate cut.

The six-month Treasury bill yield dropped 116 basis points from 12.46% on June 11 to 11.30% on July 9 and 10 before rising by 20 basis points to 11.50%. Six-month KIBOR stood at 11.67%.

Views were more divided over the policy outlook for December. Around 48.6% of respondents expect the rate to remain at 11.5%, while 45.7% expect it to fall below the current level. Another 5.7% anticipate an increase above 11.5%.

Topline expects the rate to decline below 11.5% by December 2026.

On inflation, 34.3% of respondents expect the FY2026-27 average to fall between 8% and 9%, while 31.4% forecast inflation of 9% to 10%. Another 28.6% expect inflation between 7% and 8%.

Only 2.9% expect inflation of 6% to 7%, while 3% forecast a rate above 10%. Topline expects average inflation to remain between 7% and 8% during FY27.

The survey showed that 45.7% of participants expect the rupee-dollar exchange rate to remain between Rs280 and Rs285 by December, while 31.4% see it between Rs285 and Rs290.

Another 22.9% expect the rupee to strengthen to Rs275–280, while no respondent forecast the exchange rate above Rs290 per dollar. 

Topline expects the rupee to remain in the Rs280–285 range.