Pakistan central bank expected to hold interest rate at 11% in final policy meeting of 2025
Topline poll shows 70% see no change on Dec. 15 as inflation risks, flood impact and rising imports temper calls for easing
Haris Zamir
Business Editor
Experience of almost 33 years where started the journey of financial journalism from Business Recorder in 1992. From 2006 onwards attached with Television Media worked at Sun Tv, Dawn Tv, Geo Tv and Dunya Tv. During the period also worked as a stringer for Bloomberg for seven years and Dow Jones for five years. Also wrote articles for several highly acclaimed periodicals like the Newsline, Pakistan Gulf Economist and Money Matters (The News publications)
People pass by the State Bank of Pakistan building in Karachi, Pakistan
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The State Bank of Pakistan is set to hold its final Monetary Policy Committee meeting this year on Dec. 15, with most market participants expecting the central bank to keep the benchmark interest rate unchanged at 11%.
A poll conducted by Topline Securities found that 70% of respondents expect no change in the policy rate, a sentiment similar to the firm’s previous survey in which 72% anticipated a status quo. The remaining 30% expect a rate cut: 15% foresee a 50-basis-point reduction, 9% predict a 100-basis-point cut and 6% expect a 25-basis-point decrease.
Topline added an option for a rate increase in this poll, but none of the participants expect the central bank to raise rates. In the Sept. 15 MPC meeting, minutes showed that one out of seven committee members voted for a 50-basis-point hike. Minutes of the Oct. 27 meeting have not yet been released.
Analysts said expectations of a continued hold stem from recent flooding, rising inflation projected for the second half of fiscal year 2025-26 due to base effects, and other flood-related pressures. Topline noted that the central bank may prefer to maintain the current stance because of rising non-oil imports and the risk that monetary easing could fuel additional import demand. Inflation is also expected to reach double digits in the coming months of this fiscal year.
Money-market indicators signal stability as well. The six-month treasury bill is trading at 10.97%, nearly unchanged from 10.98% at the last MPC meeting, while the six-month KIBOR stands at 11.16%, compared with 11.18% previously.
Topline Research also surveyed market expectations for interest rates, inflation and the exchange rate for FY26.
On policy rates, 52% of respondents expect the benchmark rate to remain at the current 11% by June 2026, while 33% anticipate a decline to 10%. About 6% expect rates to rise. Topline analysts also expect the rate to remain unchanged through June.
On inflation, 70% of participants forecast a range of 6 to 8%, while 24% expect inflation to fall below 6%. Topline projects average inflation between 6.5 and 7.5% for FY26, and the IMF has cited a target of 6.3%.
On the currency outlook, 42% of respondents expect the Pakistani rupee to settle between PKR 280 and PKR 285 per dollar by June 2026, while 36% forecast a level between PKR 285 and PKR 290. Topline expects the rupee to end the period in the PKR 285-290 range.
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