SBP likely to keep interest rate unchanged

ISLAMABAD: The monetary policy rate is forecast to remain unchanged at 11 percent in an upcoming monetary policy session set on December 15, as per a report published by Arif Habib Limited (AHL), and it will be maintained by the State Bank of Pakistan.

The projection arises at a time when inflation is rising again, and with external pressures, causing the central monetary authority to be cautious. AHL explained that inflation has steadily risen from 4.1 percent in July 2025 to 6.1 percent as of November 2025, with food supply disruption due to flood incidents as the main driver.

Although an average inflation rate of 5 percent for the first five months of FY26 remains unchanged, market analysts forecast a rising burden of price pressures within the next few months, particularly with Ramadan and Eid taking place within the second half of FY26.

The warning was that inflation might drift into double-digit numbers should it gain speed. Nevertheless, it might remain within the 5 percent and 7 percent target range set forth by SBP on a yearly average.

As regards the external side, it cited that the PKR has appreciated 1.2 percent thus far within the fiscal year due to higher remittances and implementation of IMF programs.