The State Bank of Pakistan (SBP) is set to hold its fourth Monetary Policy Committee (MPC) meeting of 2026 on Monday, June 15, with market participants divided over whether the central bank will maintain the current policy rate or opt for another increase.
In its previous meeting held on April 27, 2026, the SBP raised the benchmark interest rate by 100 basis points, a move that largely aligned with market expectations amid heightened geopolitical uncertainty and rising global oil prices.
As the upcoming policy decision approaches, analysts remain split on the likely outcome.
Market Expectations Remain Evenly Divided
According to a survey conducted by Topline Securities, 49 percent of respondents expect the central bank to keep the policy rate unchanged, while an equal 49 percent anticipate another rate hike.
Among those expecting tighter monetary policy:
- 34 percent foresee a 50-basis-point increase.
- 15 percent expect a 100-basis-point hike.
Only 2 percent of respondents believe the SBP could reduce rates by up to 50 basis points.
Despite the divided outlook, Topline Securities itself expects the central bank to maintain the current policy rate in the June meeting.
Oil Prices Continue to Influence Sentiment
Analysts attribute the uncertainty largely to fluctuations in global energy markets.
While geopolitical tensions in the Middle East remain a concern, ongoing diplomatic efforts and mediation attempts have helped stabilize international markets compared to the previous policy cycle.
Brent crude oil, which surged to $118 per barrel on April 29, has since eased and is currently trading at around $93 per barrel. Continued expectations of a diplomatic resolution have helped keep prices below the $100 mark in recent weeks.
Secondary Market Signals Suggest Caution
Money market indicators continue to reflect a modest tightening bias.
Yields on six-month Treasury bills currently stand at approximately 12.42 percent, while the six-month Karachi Interbank Offered Rate (KIBOR) is hovering near 12.50 percent.
These rates have increased by 92 basis points and 106 basis points, respectively, since the last MPC meeting, suggesting that investors are pricing in the possibility of a 50 to 75 basis-point adjustment.
What Markets Expect for the Rest of 2026
Topline’s survey also examined expectations regarding broader macroeconomic indicators.
Policy Rate Outlook by December 2026
- 53 percent expect the policy rate to remain above 11.5 percent.
- 31 percent expect it to settle at 11.5 percent.
- 16 percent anticipate rates falling below 11.5 percent.
Inflation Expectations for FY27
Respondents projected varying inflation outcomes:
- 20 percent expect inflation to exceed 10 percent.
- 30 percent foresee inflation between 9 and 10 percent.
- 26 percent expect it to range from 8 to 9 percent.
- 20 percent anticipate inflation between 7 and 8 percent.
- 5 percent expect inflation to remain below 7 percent.
Despite these differing views, Topline Research projects average inflation to remain within the 8 to 8.5 percent range during FY27.
Exchange Rate Outlook
The survey also points toward expectations of relative stability in the Pakistani rupee.
For FY27:
- 39 percent expect the exchange rate to range between Rs. 285 and Rs. 290 per US dollar.
- 36 percent foresee the rupee trading between Rs. 280 and Rs. 285.
- 15 percent expect a range of Rs. 275 to Rs. 280.
- 7 percent anticipate the exchange rate moving above Rs. 290 per dollar.
Topline Research projects the PKR/USD exchange rate to remain within Rs. 283 to Rs. 286 by December 2026.
With inflation concerns, global oil price movements, and external risks still in focus, all eyes are now on the SBP’s June 15 meeting, which will set the tone for Pakistan’s monetary policy outlook heading into the new fiscal year.
