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KARACHI, September 8, 2026: The State Bank of Pakistan (SBP) is likely to keep its policy rate unchanged at 11.5% at its Monetary Policy Committee (MPC) meeting on September 14.
Market participants largely expect the central bank to maintain the current rate. However, rising oil prices and growing inflation risks have increased uncertainty over the monetary policy outlook.
The SBP will hold its sixth MPC meeting of 2026 on September 14. At its previous meeting on July 27, the central bank unanimously kept the policy rate at 11.5%, in line with market expectations.
Since then, interest rate expectations have remained broadly stable. However, renewed tensions between the United States and Iran have increased uncertainty in global oil markets.
Domestic fuel prices have also risen. Petrol prices have increased by around Rs24 per litre since the last MPC meeting. Meanwhile, diesel prices have declined by only Rs2 per litre, despite the government capping crack margins at US$41.9 per barrel.
A survey by Topline Securities shows that 84% of respondents expect no change in the policy rate on September 14. Another 14% expect a 50-basis-point increase, while only 2% expect a 100-basis-point hike.
Market participants are mainly relying on the inflation outlook. With oil prices around US$95 per barrel, average inflation for fiscal year 2026-27 is expected to remain below 9%. This would leave a positive real interest rate spread of more than 250 basis points.
Improving foreign exchange reserves and a contained current account balance are also supporting expectations for a stable policy rate.
The secondary market is showing a similar trend. Three-month Treasury bills are trading at around 11.41%, while six-month Treasury bills are yielding about 11.68%. Both rates are broadly unchanged from the previous MPC meeting.
Topline Research also expects the SBP to keep the policy rate at 11.5% on September 14. The research house said the expectation is supported by a sufficient real interest rate spread and an improved external outlook, particularly following Pakistan’s recent US$3 billion Eurobond launch.
However, the outlook could change if oil prices remain high and food inflation stays elevated. In that case, the SBP may consider a 50–100 basis-point rate hike in upcoming meetings, particularly in October or December 2026.
For March 2027, market participants have mixed expectations. Around 35% expect the policy rate to remain at 11.5%, while 45% expect a cut. Another 20% expect the rate to rise above the current level.
Topline Research expects the policy rate to remain at 11.5% until March 2027. However, it warned that oil prices above US$95 per barrel, combined with persistent food inflation, could increase the chances of a rate hike.
Inflation expectations for FY27 are also divided. Around 45% of respondents expect average inflation between 8% and 9%. Another 18% expect inflation between 9% and 10%, while 16% expect it to remain between 7% and 8%.
Meanwhile, 22% expect average inflation to exceed 10%.
Topline Research now expects FY27 inflation to remain above 8.5%, compared with its earlier forecast of 8.0–8.5%, if oil prices stay between US$90 and US$95 per barrel.
Inflation is expected to remain in double digits during September 2026. Electricity prices could rise by around 10% month-on-month in September bills due to higher adjustments.
The Fuel Charges Adjustment is expected to add Rs2.0581 per unit, compared with Rs0.7503 per unit in the previous month. A quarterly adjustment of Rs0.5194 per unit is also expected, compared with a negative adjustment of Rs1.9857 per unit during the June-August quarter.
Meanwhile, higher petrol prices have pushed the estimated monthly transport inflation rate to 3.3%, compared with the earlier estimate of 0.15%.
On the currency front, most respondents expect the Pakistani rupee to remain relatively stable against the US dollar by March 2027.
Around 33% expect the exchange rate to remain between Rs280 and Rs285 per dollar. Another 24% expect it to settle between Rs285 and Rs290.
The remaining 43% expect the rupee to remain between Rs275 and Rs280 per dollar. None of the respondents expects the rupee to weaken beyond Rs290 per dollar by March 2027.
Topline Research expects the rupee-dollar exchange rate to remain between Rs280 and Rs285 by March 2027.
Overall, the survey points to a stable monetary policy in the near term. However, continued pressure from oil and food prices could force the SBP to reconsider its stance in the coming months.
