The State Bank of Pakistan (SBP) maintained its policy rate on Monday to 11 percent, after many analysts cited the risks of inflation by increasing world prices of basic products in the midst of Iran-Israel tensions.
The policy rate of the Central Bank, after being reduced by 1,000bps from 22 % since June 2024 in seven intervals, was reduced to 11 % last month.
Initially, several stockbrokers had waited for a cut, but reviewed their forecasts after Israeli strikes caused fears of a broader conflict.
The growing hostilities after Israel’s attacks to Iran on Friday had caused a strong increase in oil prices, a concern for Pakistan given the broader impact on inflation imported from a potentially prolonged conflict and the hardening of raw supplies.
Eleven of 14 respondents in a quick survey for Reuters I expected the SBP to leave the reference rate without changes to 12 percent. Two forecast a 100 -base cut (BPS) and one predicted a 50 bp cut.
“There is still an upward risk of an increase in world prices of basic products in the light of geopolitical tensions, which could mark a return to inflationary pressures,” said Ahmad Mobeen, a senior economist of S&P Global Market Intelligence.
More to follow
