Pakistan’s central bank is expected to maintain the current rate in its upcoming meeting, signaling caution in a volatile global environment. Analysts say the hike policy rate may remain unchanged at 10.5 percent due to geopolitical and economic pressures.
A report by a Karachi-based brokerage indicates that the Monetary Policy Committee of the State Bank of Pakistan will meet on March 9. Despite hopes for relief for borrowers, global tensions and rising oil prices are forcing the central bank to act carefully.
Global Factors Influence Policy
Experts from Arif Habib Limited stated that the decision reflects caution amid a shifting international landscape. The US-Iran conflict has pushed oil prices higher, impacting Pakistan’s energy import bill.
Analysts estimate that every $10 increase in oil prices could widen the current account deficit by $2 billion annually. Inflation could rise by 0.4% directly, with additional indirect effects on consumer prices. This keeps daily essentials costly for ordinary citizens.
Remittances Offer Temporary Relief
Remittances from Gulf countries, making up about 50–55% of total inflows, may help ease financial pressure. With the upcoming Eid season, expatriates are expected to send more money home, providing temporary support against external shocks.
Market Expectations
Market sentiment strongly favors a pause in the policy rate. A survey by Arif Habib Limited showed that 96% of respondents expect no change, while only a small fraction foresee a minor cut. Analysts emphasize that maintaining the hike policy rate could protect the economy from rising inflation and external risks.
However, the situation remains dynamic. If geopolitical tensions continue or inflation accelerates, a future hike policy rate cannot be ruled out. Higher interest rates could increase borrowing costs, affecting business investment and consumer spending.
Outlook
The State Bank of Pakistan is balancing the need for economic stability with pressures from global oil markets and geopolitical uncertainty. Investors, businesses, and consumers are closely watching the upcoming decision for guidance on future borrowing and spending.
Maintaining or adjusting the hike policy rate will play a key role in managing inflation and safeguarding Pakistan’s economic recovery amid a challenging global scenario.
In other news read more about: SBP Raises Key Policy Rate to 22% in Response to IMF Demands
