The State Bank of Pakistan (SBP) is expected to maintain its benchmark interest rate at 12% in its upcoming monetary policy meeting, despite some room for easing, Bloomberg Economics reported.
The central bank’s cautious posture is seen as a reflection of its priority to safeguard financial stability amid ongoing economic and geopolitical uncertainties.
According to analysts, the SBP is likely to adopt a wait-and-see approach until the fiscal year 2026 budget is announced. The upcoming budget may include additional indirect taxes that could fuel inflation, complicating any immediate shift toward monetary easing.
A widening trade deficit is also weighing heavily on the central bank’s policy outlook. Imports surged to $15 billion in the first quarter of 2025 — the highest level since the third quarter of 2022 — raising fresh concerns over external imbalances.
In addition, the SBP is expected to hold off on rate adjustments until Pakistan secures the next tranche of its IMF loan, which would help replenish foreign exchange reserves and anchor market confidence.
Currency volatility and rising regional tensions further cloud the near-term economic outlook. Bloomberg Economics notes that global trade risks and unsettled financial markets leave little room for monetary loosening at this stage.
While macroeconomic indicators suggest some capacity for a rate cut, analysts argue that the SBP is likely to prioritise long-term stability over short-term stimulus.
