KARACHI, June 12, 2025 — The State Bank of Pakistan (SBP) is scheduled to announce its monetary policy decision on June 16, 2025, with a majority of market participants and analysts expecting the central bank to keep the policy rate unchanged, according to a poll conducted by Topline Securities.
The brokerage house noted that 56 percent of respondents in its latest survey anticipate a status quo in the upcoming Monetary Policy Committee (MPC) meeting, a notable increase from 31 percent in the previous poll. Meanwhile, 44 percent of participants are expecting a rate cut of at least 50 basis points (bps), with 19 percent expecting a 50bps cut and 25 percent anticipating a more aggressive 100bps cut.
Topline Securities stated that while there is room for a further 100bps rate cut, they expect the SBP to maintain the current policy rate due to several emerging risk factors. The brokerage projects inflation for FY26 to average between 6-7 percent, which would translate into a real interest rate of 400-500bps (assuming a policy rate of 11 percent)—significantly higher than the historical average real rate of 200-300bps.
“Despite this room, we expect the central bank to adopt a cautious stance in light of rising international oil prices and pending domestic utility price adjustments,” Topline said.
Brent crude prices have recently rebounded to $68–$70 per barrel, driven by escalating geopolitical tensions in the Middle East and progress toward a potential U.S.–China trade deal. Given the historical role of energy prices in fueling inflation, Topline believes the SBP will likely wait for more clarity before making further cuts.
Additionally, key fiscal decisions—including gas and electricity price notifications—are expected before the start of the new fiscal year. The inflationary impact of these changes is yet to be fully assessed.
Notably, in its previous meeting on May 5, 2025, the MPC cut the policy rate by 100bps, with eight out of nine members voting in favor of the move. Following the rate cut, yields on both the 6-month KIBOR and T-bills declined by 88–99bps. Currently, the 6-month KIBOR stands at 11.09 percent, while the 6-month T-bill yield is 10.95 percent.
Topline also surveyed market expectations for interest rates and inflation by December 2025. According to the poll:
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42 percent of respondents expect the interest rate to fall within the 8–10 percent range, up from 37 percent in the previous poll.
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58 percent still believe the interest rate will remain above 10 percent, a slight decrease from 63 percent earlier.
Topline forecasts the policy rate to bottom out at 10 percent by the end of December 2025.
On the inflation front, 69 percent of survey participants expect FY26 inflation to range between 6–8 percent, while 20 percent forecast 8–10 percent, and 11 percent anticipate it falling below 6 percent.
The brokerage’s FY26 inflation outlook aligns with the government’s official target of 7.5 percent and the IMF’s projection of 7.7 percent.
As Pakistan’s economy navigates through a complex mix of global and domestic challenges, all eyes are on the SBP’s upcoming policy announcement, which could set the tone for financial markets and investor sentiment in the months ahead.
