KARACHI – All eyes are at State Bank of Pakistan’s Monetary Policy Committee (MPC) meeting as financial markets and analysts are expecting increase in policy rate.
SBP is said to deliver strong 100 basis point hike, pushing the benchmark rate from 10.5% to 11.5%. Some experts hinted at 50 basis point increase, amid uncertainty surrounding both domestic and global conditions.
Inflation remains at the center of the storm. Short-term inflation has surged to 14% (week ending April 23), underscoring persistent and intensifying price pressures across the economy. Recent increases in petrol and diesel prices have further fueled inflationary expectations, adding urgency to today’s policy decision.
At the same time, experts say the macroeconomic outlook is being clouded by heightened regional instability, particularly the ongoing tensions in the Gulf. Economists warn that the situation could spill over into global markets, potentially disrupting energy prices, trade flows, and capital markets, adding another layer of complexity for policymakers.
The current environment remained “unprecedented and highly uncertain risks,” cautioning that if inflation persists or accelerates, Pakistan could face serious economic consequences, including slower industrial growth and rising poverty levels.
While bankers and market participants broadly agree that a rate hike is imminent, the debate is now centered on its magnitude. A 50bps increase is being viewed as a cautious approach, while a 100bps hike is seen by others as necessary to anchor inflation expectations and stabilize financial inflows.
Global financial markets are experiencing unusual synchronized volatility, with oil, currencies, equities, and bonds all moving sharply and often in conflicting directions, making April 2026’s monetary policy decision critical and complex.
