KARACHI – Rising geopolitical tensions and volatile oil markets continue to ripple through global economy and now its testing financial resilience of Pakistan.
A report by Karachi based brokerage house suggests that Monetary Policy Committee of State Bank of Pakistan is expected to hold policy rate at 10.5percent in its upcoming meeting on March 9. Despite hopes of relief for borrowers and businesses, analysts warn that global uncertainties and rising geopolitical tensions are forcing the central bank to play it safe.
Experts from Arif Habib Limited say decision reflects caution in face of rapidly shifting international landscape. A flare-up in the US-Iran conflict has already sent oil prices soaring and rattled global financial markets. If crude prices remain elevated, the impact could be severe for Pakistan, which relies heavily on imported energy.
Analysts estimate that every $10 jump in oil prices could widen the country’s current account deficit by a staggering $2 billion annually. Inflation could also creep higher, potentially rising by 0.4% directly, with indirect effects pushing consumer prices beyond the government’s medium-term target of 5–7%. For ordinary citizens, this means the cost of everyday essentials could remain under pressure.
There is a glimmer of hope. Remittances from Gulf countries, responsible for roughly 50–55% of Pakistan’s total inflows, may provide some financial breathing room. With Eid season approaching, expatriates are expected to send more money home, offering a temporary cushion against external shocks.
Market sentiment strongly backs rate pause. A survey by Arif Habib Limited found that 96% of participants expect no change in the policy rate, while only a tiny fraction foresee a minor cut.
The situation remains fluid. If geopolitical tensions persist and inflation accelerates, an interest rate hike cannot be ruled out in future. Higher borrowing costs could dampen business investment and consumer spending, complicating efforts to revive economic growth.
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