The State Bank of Pakistan’s Monetary Policy Committee on Monday kept the benchmark policy rate unchanged at 11.5%, as easing oil prices and a US-Iran deal cooled inflation fears.
The MPC met on Monday for the final policy review of FY26 and the fourth meeting of the calendar year.
The central bank had raised the policy rate by 100 basis points to 11.5% in its previous meeting on April 27, marking the first hike in almost three years.
At the time, the SBP had cited rising global energy prices, higher freight charges and insurance premiums, and supply chain disruptions after the Middle East conflict intensified risks to the macroeconomic outlook.
Those risks eased after the United States and Iran said they had reached a deal to end their war and reopen the Strait of Hormuz, sending relief through global markets.
Prime Minister Shehbaz Sharif said the United States and Iran would sign a memorandum of understanding in Switzerland on June 19, with Pakistan having served as mediator.
Topline had expected the SBP to keep rates unchanged, citing efforts towards an early resolution of the war and active mediation by Pakistan.
Its poll showed 49.2% of respondents expected no change, while another 49.2% anticipated a rate hike. Among those expecting an increase, 34.4% forecast a rise of up to 50 basis points and 14.8% expected a 100bps hike.
A separate CFA Society Pakistan survey showed 31% expected no change, 43% expected a 50bps increase and 26% anticipated a 100bps hike.
Topline said six-month T-bills and six-month KIBOR were hovering at 12.42% and 12.50%, respectively, suggesting that secondary market yields had priced in a 50bps to 75bps hike.
Pakistan had begun an easing cycle in June 2024, cutting rates by a cumulative 1,150 basis points before the April 27 hike interrupted the cycle.
