Market Anticipates No Change as SBP Monetary Policy Committee Convenes
Investors expect the State Bank of Pakistan to keep the policy rate at 11.5%, reflecting a balance between inflation pressures and improving external buffers.
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Policy rate hold is expected to keep market conditions unchanged, so watch for any shifts.
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Sectors: Economy, Markets, Banks — Neutral · Watch. PSX tickers: MEBL, MCB, UBL, HBL, BAHL, FABL. Policy rate hold is expected to keep market conditions unchanged, so watch for any shifts.
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Open on Business Recorder## Overview
The State Bank of Pakistan (SBP) Monetary Policy Committee (MPC) is set to meet today for the second time this fiscal year. A majority of market participants forecast that the committee will hold the policy rate steady at 11.5%.
## Recent Decision Context
At its last meeting on July 27, the MPC left the policy rate unchanged at 11.5% despite signs of macro‑economic improvement. The central bank cited heightened external risks, particularly the renewed conflict in the Middle East, as a reason to maintain the current stance.
## Analyst Expectations
Analysts from Ismail Iqbal Securities, Topline Securities, and JS Global all project a status‑quo outcome. Their reasoning includes: - Persistent inflationary pressure from global oil prices, currently around $95 per barrel. - A forward‑looking inflation outlook that remains in single‑digit territory on average. - An improving real spread of over 250 basis points, supported by stronger foreign reserves and a contained current‑account balance. - Recent successful €3 billion Eurobond issuance, which bolsters external confidence.
## Potential Risks
While the consensus is for a hold, analysts warn that if oil and food prices stay elevated, the MPC could consider a 50‑100 basis‑point hike in upcoming meetings, likely in October or December 2026. Geopolitical tensions, especially in the Middle East, could also trigger a tighter stance.
## Market Sentiment
Surveys show 84% of respondents expect no change, 14% anticipate a 50‑basis‑point increase, and 2% foresee a 100‑basis‑point rise. The prevailing view is that the current policy rate adequately balances inflation targeting (5‑7%) with external risk considerations.
## Outlook
Investors should monitor oil price movements, regional geopolitical developments, and upcoming inflation data for any shift in the MPC’s policy trajectory.