Analysts expect inflation to average 6%\u20138% in coming months but warned higher oil prices could push it up
\n islamabad
\nThe State Bank of Pakistan (SBP) 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.
\nAll 10 analysts in a Reuters poll expect the SBP to hold the rate at 10.5%, after policymakers held the rate in January.
\nThe SBP has cut the key rate by a cumulative 11.5% since mid-2024, from a record high of 22%.
\nEscalating 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\u2019s import bill and inflationary pressures.
\nAnalysts expect inflation to average 6%\u20138% in coming months but warned higher oil prices could push it up further.
\n\u201cEnergy prices should dictate the policy rate trajectory. Inflation could average around 7% during the second half of FY26,\u201d AKD Securities analyst Muhammad Aliv said.
\nPakistan\u2019s heavy reliance on imported fuel leaves it vulnerable to global price shocks.
\n\u201cHigher oil prices widen the trade deficit and pressure the rupee,\u201d Waqas Ghani, head of research at JS Capital said.
\nGhani said every $10 per barrel increase in crude prices adds about 0.5% to inflation, which clocked in at 7% in February, jumping from 5.8% in January.
\nThe SBP says it aims to maintain a positive real interest rate to anchor inflation expectations under Pakistan\u2019s $7 billion IMF programme, though inflation could exceed its 5%\u20137% target range for a few months this year as growth picks up and imports widen the trade deficit.
\nGovernor Jameel Ahmad told Reuters last month policymakers remained focused on medium-term price stability, even as the economy was projected to grow 3.75%\u20134.75% in the financial year 2026, supported by stronger domestic demand and earlier monetary easing.
\nAnalysts said external risks, including higher oil prices, rupee pressure and a widening trade deficit, could delay any move toward further monetary easing.<\/p>\n","protected":false},"excerpt":{"rendered":"
Analysts expect inflation to average 6%\u20138% in coming months but warned higher oil prices could push it up islamabad The State Bank of Pakistan (SBP) 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 […]<\/p>\n","protected":false},"author":2,"featured_media":501587,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-535080","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"\n