SBP seen holding rates as oil shock splits analysts

Pakistan’s central bank is expected to hold its key policy rate at 10.5% at its upcoming meeting, according to a Reuters poll, though some analysts warn that rising oil prices from the Iran-US conflict could prompt the first rate hike in nearly two years. Six of the 10 analysts surveyed expect the State Bank of Pakistan (SBP) to keep the rate unchanged in its next meeting on Monday, while three forecast a 50-basis-point (bp) increase and one a larger 100-bp hike, a hawkish shift not seen since before the central bank’s aggressive easing cycle began in mid-2024. The SBP has cut rates by a cumulative 1,150 bps since June 2024, when they peaked at a record 22%, and last reduced them by 50 bps in January.