The State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) is scheduled to meet on Monday to decide the country’s benchmark interest rate, with market participants increasingly anticipating another increase amid persistent inflationary pressures and uncertainty surrounding the external economic environment. A survey conducted by Topline Securities indicates that most respondents expect the central bank to tighten monetary policy, with a 50-basis-point increase emerging as the most widely anticipated outcome. The decision is being closely watched by investors, businesses and financial institutions because changes in the policy rate influence borrowing costs, investment decisions, consumer spending and the broader economic outlook.
SBP Governor Jameel Ahmed will preside over the meeting and announce the committee’s decision at a press conference at the central bank’s head office. At its previous meeting on September 14, 2026, the MPC maintained the policy rate at 11.5%. However, concerns about the future path of inflation and the possibility of external economic shocks have strengthened expectations that the central bank may consider a further increase. Higher international oil prices are among the factors influencing these expectations, as Pakistan’s dependence on imported energy exposes domestic prices and the external account to changes in global commodity markets.
According to the Topline Securities survey, 61% of market participants expect the SBP to increase the policy rate, while the remaining 39% anticipate that the central bank will maintain the existing rate. Within the group expecting a rise, 54% of all respondents forecast an increase of 50 basis points, while 7% expect a larger adjustment of 100 basis points. The results indicate that a rate hike is the leading expectation among those surveyed, although a significant proportion of participants still believe the central bank could leave the rate unchanged. The distribution of responses highlights the uncertainty surrounding the MPC’s assessment of inflation risks and the appropriate monetary policy response.
Topline Securities itself expects the SBP to raise the benchmark rate by 50 basis points, arguing that tighter monetary policy could help address inflationary risks and provide protection against prolonged external pressures. The brokerage’s assessment places particular emphasis on international oil prices, which have remained elevated amid geopolitical tensions and concerns about energy supply routes. For Pakistan, expensive oil can increase import costs, place pressure on the current account and contribute to higher domestic fuel, transport and production expenses. These pressures can gradually affect prices across the economy, making energy market developments an important consideration for the central bank when setting monetary policy.
The brokerage estimates that if Brent crude oil prices remain around $100 per barrel, Pakistan’s headline inflation could average between 9% and 9.5% during fiscal year 2027. At the existing policy rate of 11.5%, this inflation outlook would leave the real interest rate at approximately 200 to 250 basis points, according to Topline Securities. The real interest rate represents the policy rate after accounting for inflation and is one factor used to assess how restrictive monetary policy is relative to prevailing price pressures. A higher inflation rate reduces the gap between the nominal policy rate and inflation, potentially influencing the central bank’s decisions about whether current monetary conditions are sufficient to contain price growth.
Topline Securities also projects that inflation could average above 8.5% over the next 12 months, exceeding the SBP’s medium-term inflation target range of 5% to 7%. If inflation remains above this range, the central bank may face pressure to consider additional measures to prevent price increases from becoming more persistent. However, the final decision will depend on the MPC’s assessment of available economic data, inflation expectations and external risks. A rate increase could help restrain demand and support efforts to contain inflation, but it could also raise financing costs for businesses and households.
The policy announcement comes at a time when investors are monitoring both domestic economic conditions and international developments. Elevated oil prices and uncertainty over external economic pressures have added to concerns about Pakistan’s inflation outlook, while the existing policy rate remains an important reference point for banks, borrowers and investors. The MPC’s decision will determine whether the central bank considers the current rate sufficient to manage these risks or believes an increase is necessary. The survey results provide an indication of market expectations, but the actual outcome will depend on the committee’s deliberations and its evaluation of the risks facing the economy.
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