KARACHI – The State Bank of Pakistan (SBP) is set to announce its next policy rate decision on September 14, 2026.
Market expectations currently point toward no change in the interest rate. A recent AHL survey showed strong support for maintaining the current rate.
Around 87.5 percent of respondents expect the central bank to keep rates unchanged. Meanwhile, 12.5 percent expect a 50-basis-point increase.
The current policy rate stands at 11.5 percent. The upcoming decision comes as Pakistan’s economy shows mixed trends.
Inflation has increased sharply in recent months. At the same time, external and fiscal indicators have shown improvement.
Inflation Remains a Major Concern
Inflation is expected to remain a key factor in the upcoming decision. Average consumer inflation reached 10.18 percent during the first two months of FY27.
The figure marks a significant increase from the same period last year. Consumer inflation stood at 3.56 percent during the corresponding period.
The sharp increase could create pressure on the State Bank to tighten monetary policy. However, policymakers may assess whether the rise is temporary or persistent.
The broader inflation trend will likely influence future interest rate decisions. The central bank may avoid reacting to a short-term price increase.
External Position Shows Improvement
Pakistan’s external account has also shown positive developments. The current account deficit declined by 38 percent year-on-year in July.
The deficit stood at $328 million during the month. Remittances also increased by 13 percent to $3.6 billion.
Higher remittances could support foreign exchange liquidity. They may also reduce pressure on the country’s external financing needs.
Pakistan’s fiscal position has also strengthened. The country recorded a primary fiscal surplus equal to 2.9 percent of GDP in FY26.
The surplus exceeded the target agreed with the International Monetary Fund (IMF). This provides another positive indicator ahead of the monetary policy decision.
Industrial Activity Gains Momentum
Industrial activity is also showing signs of recovery. Large-scale manufacturing expanded by around 5 percent during FY26.
It was the sector’s strongest performance in approximately four years. The growth suggests that economic activity is gaining momentum.
However, higher inflation could complicate the economic outlook. The State Bank therefore faces a difficult balance between growth and price stability.
For now, market expectations strongly favour maintaining the policy rate at 11.5 percent. Still, the possibility of a rate increase remains due to inflation concerns.
Upcoming Monetary Policy Meetings
The SBP has already scheduled several monetary policy meetings through 2027. After September 14, the next decisions are planned for October 26 and December 14, 2026.
Further meetings are scheduled for January 25, March 8, April 26 and June 17, 2027.
An analyst briefing will follow the September decision on September 15. The minutes of the September meeting are scheduled for October 9.
The October meeting will also include an analyst briefing on October 27. Its MPC minutes are expected on November 20.
The December meeting is scheduled for December 14. Its analyst briefing will take place the following day.
The previous MPC meeting was held on July 27, 2026. The upcoming decision will build on developments reviewed during that meeting.
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The State Bank will now assess inflation, economic growth and external conditions. Its decision could provide important signals about Pakistan’s monetary policy direction.
