97% Expect SBP To Hold Policy Rate

According to a survey conducted by Topline Securities, nearly 97% of market participants expect the State Bank of Pakistan (SBP) to keep its benchmark policy rate unchanged at 11.5% during the upcoming Monetary Policy Committee (MPC) meeting scheduled for July 27.

The remaining 3% believe the central bank will lower the policy rate by 100 basis points.

Topline Securities also forecasts no change in the policy rate, citing renewed geopolitical tensions and the recent increase in global oil prices despite relatively stable domestic inflation.

The SBP had also maintained the policy rate at 11.5% during its previous MPC meeting on June 15. At that time, Topline’s survey showed that 49% of respondents had expected the rate to remain unchanged.

Expectations of monetary easing had increased after the United States and Iran signed a Memorandum of Understanding (MoU) on June 18, easing geopolitical uncertainty and pushing international oil prices lower. Markets had begun anticipating cumulative rate cuts of 100 to 150 basis points over the next two to three policy meetings.

However, renewed tensions between the US and Iran over the past two weeks, coupled with rising oil prices, have weakened expectations of an immediate interest rate cut.

The six-month Treasury bill yield fell by 116 basis points from 12.46% on June 11 to 11.30% on July 9 and 10 before increasing by 20 basis points to 11.50%. Meanwhile, the six-month Karachi Interbank Offered Rate (KIBOR) stood at 11.67%.

Market participants were more divided over the policy outlook for December. Around 48.6% expect the policy rate to remain at 11.5%, while 45.7% believe it will fall below the current level. Another 5.7% anticipate the rate rising above 11.5%.

Topline expects the policy rate to decline below 11.5% by December 2026.

Regarding inflation, 34.3% of respondents expect average inflation during FY2026–27 to range between 8% and 9%, while 31.4% forecast inflation between 9% and 10%. Another 28.6% expect inflation to average between 7% and 8%.

Only 2.9% expect inflation to fall within the 6% to 7% range, while 3% believe it will exceed 10%. Topline projects average inflation to remain between 7% and 8% throughout FY2026–27.

The survey also found that 45.7% of respondents expect the rupee to trade between Rs280 and Rs285 against the US dollar by December, while 31.4% forecast a range of Rs285 to Rs290.

Another 22.9% believe the rupee will strengthen to between Rs275 and Rs280, while none of the respondents expect the exchange rate to exceed Rs290 per US dollar. Topline also expects the rupee to remain within the Rs280–285 range.