The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP), the second of this calendar year, will meet today (Monday) to discuss the country’s economic issues and decide on the policy rate.
At its previous meeting, held on January 26, 2026, the MPC, against market expectations, kept its benchmark policy rate unchanged at 10.5%.
Market experts widely expect the central bank to maintain the status quo in today’s meeting on account of escalating tensions in the Middle East.
Arif Habib Limited (AHL) anticipates that the SBP is expected to keep the policy rate unchanged, “signalling caution amid a rapidly evolving global backdrop”.
Similarly, Topline Securities, another brokerage house, expects no change, citing a recent survey showing that 96% of participants expected no rate cut.
The brokerage house attributed the shift in market perception to war like situation in the Gulf region, which has jacked up Brent oil prices by 25% in the last 2-3 weeks.
Similarly, a Reuters poll found that the central bank is expected to hold its key policy rate steady as rising global energy prices and regional tensions cloud the inflation outlook and limit the room for cuts.
All 10 analysts in a Reuters poll expect the SBP to hold the rate at 10.5%.
Previous MPC meeting
In its last meeting, held on January 26, the MPC held the policy rate at 10.5%.
Back then, the MPC, in its statement, noted that headline inflation of 5.6% y/y in December 2025 was in line with its expectation. However, core inflation has steadied around a relatively higher level of 7.4% in recent months.
“Meanwhile, as reflected by the recent high frequency indicators (HFIs), including large-scale manufacturing (LSM), economic activity continues to gain momentum faster than anticipated, mainly led by domestic-oriented sectors.
“Based on this, the committee deemed it prudent to hold the policy rate unchanged at the current level to ensure price stability and support sustainable economic growth.”
Since the last MPC meeting, several key economic developments have occurred.
The rupee has appreciated by 0.16%, while petrol prices have jumped by 27%.
Internationally, oil prices have risen by nearly 42% since the last MPC, hovering around $92 per barrel.
Pakistan’s headline inflation clocked in at 7% on a year-on-year (YoY) basis in February 2026, the highest since October 2024, according to Pakistan Bureau of Statistics (PBS) data, a reading in line with the Ministry of Finance’s estimate of 6-7%.
In addition, Pakistan recorded a current account surplus of $121 million in January 2026, according to data released by the SBP.
However, on a cumulative basis, the country posted a current account deficit of $1.07 billion during July-January FY26, compared to a surplus of $560 million in the same period last fiscal year.
The foreign exchange reserves held by the SBP increased to $16.3 billion during the week ended Feb 27, 2026, according to the latest data released by the central bank.
The SBP-held reserves rose by $87 million on a weekly basis. Overall, the country’s total liquid foreign exchange reserves stood at $21.43 billion.
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