The State Bank of Pakistan (SBP) is set to announce its next monetary policy decision on September 15, 2025, with analysts and financial markets largely expecting no change in the benchmark rate. This will mark the third consecutive meeting where the Monetary Policy Committee (MPC) is projected to keep the policy rate steady at 11%, a level first reached in May 2025.
The decision comes amid a fragile economic backdrop where devastating floods have disrupted food supplies, putting fresh pressure on inflation. Rising import payments have also intensified concerns over Pakistan’s external account, making it less likely for the central bank to opt for further monetary easing in the near term.
According to a recent survey conducted by Topline Securities, 72% of market participants believe the SBP will maintain the current policy rate, a sharp increase from 37% in the last poll. This change in expectations reflects growing anxiety over food inflation and supply chain disruptions caused by the floods. Topline’s analyst, Shankar Talreja, noted that crop damage and logistical hurdles could elevate inflation in the coming months, making a status quo approach more prudent.
Despite the strong consensus for no change, a segment of the market remains hopeful for a rate cut. Around 28% of respondents anticipate some easing, with expectations ranging from a modest 25 basis points cut to a more aggressive 100 basis points reduction. However, analysts argue that the inflationary fallout from the floods makes such moves less likely in the immediate term.
Historical data further supports this cautious outlook. During the 2010–2011 floods, cultivated areas for major crops such as wheat, rice, and cotton contracted by 3–18%, while rice production dropped nearly 30% in FY11, according to the Economic Survey of Pakistan. If similar patterns emerge, inflationary pressures could persist, limiting room for monetary accommodation.
The SBP has already delivered an aggressive round of easing in the past year. Between June 2024 and May 2025, the central bank slashed the policy rate by 11 percentage points, halving it from 22% to 11%. This was initially supported by declining inflation readings and a policy drive to stimulate economic activity. Since then, the central bank has kept rates unchanged in its June and July meetings, considering the current stance suitable for anchoring inflation expectations at 5–7% and supporting growth of 3.25–4.25% in FY26.
Market indicators also align with the expectation of stability. Treasury bill yields in the secondary market and the Karachi Interbank Offered Rate (KIBOR) have remained broadly unchanged since the last MPC meeting, signaling that investors are preparing for a steady policy outlook.
Looking ahead, Topline Research suggests the SBP still has some room to cut rates in the medium term, possibly by 50–100 basis points, once the immediate inflationary risks from floods subside. The research house projects inflation to average between 6–7% for FY26, translating into a real interest rate significantly higher than historical averages. Their target is for the policy rate to reach 10% by June 2026.
On the currency front, Topline’s poll revealed that 50% of participants expect the rupee to settle between Rs285–290 per dollar by December 2025, while 34% see it at Rs282–285. By June 2026, expectations shift towards Rs295–300, reflecting sustained pressure on the currency from external imbalances.
As the MPC prepares to deliberate, the SBP faces a delicate balancing act: safeguarding growth momentum while protecting households from a new wave of inflation driven by climate shocks. The September meeting is unlikely to bring surprises, but the path forward will remain highly dependent on food supply recovery and the broader external environment.
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