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Why SBP kept interest rates unchanged

SBP kept rates unchanged as easing inflation and lower oil prices reduced near-term economic risks

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Moiz Ur-Rehman

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Shahbaz Ashraf

Business Consultant

Seasoned Investment Professional | CFA | 17+ Years of Experience in Equity Research, Valuation & Advisory Seasoned investment professional with over 17 years of experience in equity research, financial analysis, valuations, and investment advisory—primarily focused on financial services firms, including equity brokerages, asset management companies, and family offices. Skilled in financial modeling, portfolio management, and evaluating multi-asset investment opportunities. Known for delivering data-driven insights and actionable strategies tailored to both institutional and private clients. Holds a BBA and MBA in Finance from the Institute of Business Management (IoBM), Karachi, and is a Chartered Financial Analyst (CFA).

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The State Bank of Pakistan's latest monetary policy decision reflects easing inflationary risks following the decline in international oil prices.

The previous 100 bps rate hike was largely a pre-emptive move to anchor inflation expectations amid heightened geopolitical uncertainty.

With the FY27 budget also signaling a tilt towards growth while maintaining fiscal discipline, the latest decision appears consistent with the evolving macroeconomic landscape.

The policy stance should be viewed positively by the market, with bond yields likely to decline further as inflation expectations moderate, improving valuations for equities and supporting broader investor sentiment.

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