KARACHI: The State Bank of Pakistan (SBP) is set to convene its Monetary Policy Committee (MPC) meeting on March 10, 2025, to review the country’s monetary policy stance.
According to a poll conducted by Topline Securities, 38% of market participants expect the central bank to maintain the current policy rate, while 62% anticipate a rate cut of at least 50 basis points (bps). However, analysts at Topline Securities predict that the SBP’s MPC will opt for a status quo in the upcoming meeting.
Topline analysts believe the central bank has room for a 100bps rate cut, considering that inflation for the fiscal year 2026 (FY26) is projected to average between 8-9%. With the current policy rate at 12%, this translates into a real interest rate of 300-400bps, whereas historically, Pakistan has maintained a real rate of 200-300bps.
Multiple factors suggest a cautious approach. The International Monetary Fund (IMF) review is scheduled for the first week of March, where discussions on new revenue targets and budgetary taxation measures will take precedence. These developments may influence the inflation outlook for FY26, prompting the SBP to adopt a wait-and-see approach.
Additionally, higher import figures in the past two months (December and January, averaging $5.2 billion) and a 1.6% depreciation of the Pakistani Rupee in the kerb market since November 2024 may lead the central bank to pause further monetary easing. Policymakers are likely to assess the impact of previous rate cuts before implementing additional adjustments.
The upcoming MPC meeting will be closely watched by investors and businesses, as it will set the tone for economic and financial market expectations in the months ahead.
