SBP likely to keep policy rate at 10.5% amid Middle East tensions

The State Bank of Pakistan (SBP) is expected to keep the policy interest rate unchanged at 10.5% in its upcoming Monetary Policy Committee (MPC) meeting scheduled for Monday.

In its last meeting, the central bank also maintained the rate at 10.5%, in line with market expectations. The decision came amid ongoing global uncertainty, especially rising tensions in the Middle East, along with concerns about higher energy prices and inflation risks.

Experts believe the SBP will continue to take a cautious approach instead of making any major changes. They expect the policy rate to remain unchanged in the April monetary policy statement due to unstable global conditions.

Analysts point to continued tensions between the US and Iran as a key factor affecting global markets. Oil prices have also been highly volatile, rising and falling sharply, which is adding pressure to economic sentiment.

On the domestic side, inflation has seen some impact but remains largely under control. Transport inflation increased by 12% in March and is expected to rise further to around 15% in April. However, experts say this does not show a broader inflation trend across the economy.

They also expect inflation could reach double digits in the final quarter of FY26, mainly due to base effects and changes in energy prices rather than strong demand in the market.