Pakistan’s central bank is widely expected to hold its key policy rate at 10.5% during Monday’s review, as rising oil prices complicate the inflation outlook.
A Reuters poll showed all 10 analysts anticipate the State Bank of Pakistan will maintain current rates following January’s decision to keep borrowing costs unchanged.
The central bank has already cut rates by 11.5 percentage points since mid-2024, lowering the benchmark from a record high of 22%.
However, escalating Middle East tensions have pushed global energy prices higher, increasing Pakistan’s import costs and raising fresh inflation concerns.
Analysts expect inflation to average between 6% and 8% in the coming months, though further oil price gains could push it higher.
Pakistan’s heavy reliance on imported fuel means higher crude prices widen the trade deficit and place additional pressure on the rupee.
Economists estimate that every $10 rise in oil prices could add roughly 0.5 percentage points to inflation, which reached 7% in February.
Policymakers remain focused on maintaining positive real interest rates under the country’s $7 billion IMF program while balancing growth and financial stability.
