KARACHI:

The State Bank of Pakistan (SBP)’s Monetary Policy Committee (MPC) has decided to maintain the policy rate unchanged at 10.5% following its meeting on March 9, 2026. The decision aligns closely with market expectations and recent analyst surveys amid heightened regional geopolitical tensions.

The hold comes as the second MPC meeting of the calendar year 2026, following the January 26 meeting, where the rate was also kept steady at 10.5% despite earlier expectations of easing. 

The latest stance reflects caution over potential imported inflation pressures from surging global energy prices, triggered by the US-Iran tensions that have driven Brent crude up sharply to around $108 per barrel. Following the suit, the Pakistani government also increased petrol prices by Rs55 per litre, bringing the new price to Rs321.17 per litre.

A pre-MPC survey by Topline Securities (released March 6, 2026) captured strong consensus for status quo: 92% of respondents had anticipated no change to the policy rate, a notable shift from the January poll, where many had expected cuts.

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Key factors cited included a 25% spike in Brent oil prices and corresponding global diesel price jumps of 37-49%, raising concerns for oil-import-dependent Pakistan.

62% of survey participants expected the regional turmoil to persist for 2-5 weeks. Market reactions showed caution, with 58-85 bps increases observed in 6-month T-bill and KIBOR yields leading up to the decision.

Looking ahead, 60% foresaw the policy rate remaining at 10% (or close to current levels) by June 2026, while 58% projected average CPI inflation around 7% and PKR/USD stability in the 280-285 range. However, prolonged conflict could exacerbate currency pressures, fuel inflation, and potentially force future rate adjustments upward if imported cost pressures intensify.

This cautious pause is seen as support for ongoing macroeconomic stability efforts, building on prior rate reductions (including the 50 bps cut to 10.5% in December 2025), while allowing time to monitor energy price dynamics, domestic inflation trends, and external account resilience.

The SBP emphasised in its previous many PMC statements a balanced approach to safeguarding price stability while nurturing sustainable growth recovery.