Monetary policy today

KARACHI: The State Bank of Pakistan (SBP) is set to announce its monetary policy for the next 50 days today (Monday), with market participants widely expecting the Monetary Policy Committee (MPC) to keep the policy rate unchanged. The policy rate has remained at 11. 5 percent since April, when the Committee raised it by 100 basis points to 11. 5 percent, effective April 28, 2026, citing heightened risks to Pakistan’s macroeconomic outlook arising from the intensifying Middle East conflict. In its subsequent meeting in June, the MPC decided to maintain the policy rate at the same level. The MPC meeting, scheduled for today and to be chaired by Governor SBP Jameel Ahmad, will review recent economic developments and key macroeconomic indicators before deciding on the policy rate. READ MORE: SBP keeps policy rate unchanged at 11. 5% as inflation outlook stabilises The Committee is expected to maintain a status quo, reflecting the SBP’s cautious approach amid evolving domestic and external economic conditions, analysts said. They noted that geopolitical tensions in the Middle East have escalated once again, while rising volatility in global oil prices poses risks to Pakistan’s economic outlook. Given these uncertainties, the MPC is most likely to keep the policy rate unchanged. According to Topline Securities’ poll, 97 percent of respondents expect the policy rate to remain unchanged in the committee meeting to be held on Jul 27, 2026; however 3 percent anticipate a 100bps cut. Overall Pakistan’s economic indicators are moving in a positive direction. On the external side, the country’s current account posted a controlled deficit of USD 136 million in FY26, within target compared to a USD 1. 8 billion surplus in FY25. The SBP was already expecting a deficit of up to 1 percent of GDP in the last fiscal year. The current account deficit is primarily driven by higher goods imports, reflecting increased economic activity and supporting the country’s growth momentum. In addition, despite substantial external debt servicing obligations, the SBP successfully met its target of maintaining foreign exchange reserves at USD 18 billion by the end of June 2026. Workers’ remittance inflows also exceeded earlier projections, with Pakistan receiving a record USD 41. 6 billion during FY26, providing significant support to the country’s external account and foreign exchange reserves. Inflation stood at 11. 1 percent in June, while the average inflation for FY26 remained around 7. 05 percent, close to the SBP’s target range of 5-7 percent. Governor SBP Jameel Ahmad is optimism that inflation would decline further during the coming months. Copyright Business Recorder, 2026

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