SBP seen holding rates steady as oil surge threatens inflation trajectory

The central bank ​is expected to hold its key policy rate steady at a policy ‌review on Monday, a Reuters poll showed, as rising global energy prices and regional tensions cloud the inflation outlook and limit the room for cuts.

All 10 analysts in a Reuters poll expect the State ​Bank of Pakistan (SBP) to hold the rate at 10.5 per cent, after policymakers held the rate ​in January.

The central bank has cut the key rate by a cumulative ⁠11.5 percentage points since mid-2024, from a record high of 22pc.

Escalating Middle East tensions ​after the US and Israel attacked Iran have raised the risk of disruption to shipping ​through the Strait of Hormuz and pushed oil-and-gas prices higher, adding to Pakistan’s import bill and inflationary pressures.

Analysts expect inflation to average between 6pc and 8pc in the coming months, but warned higher oil prices could push it up ​further.

“Energy prices should dictate the policy rate trajectory. Inflation could average around 7pc during ​the second half of........

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