MPC meeting on 14th: Policy rate expected to stay unchanged

KARACHI: The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) is widely expected to keep the policy rate unchanged at its upcoming meeting on September 14, as mounting inflationary pressures from elevated global oil prices could limit the scope for monetary easing.

The SBP is scheduled to hold the MPC meeting of 2026 on Sep 14, 2026 for celebration on the key economic issues to take a decision on key policy rate. The committee in its last meeting held on Jul 27, 2026, unanimously kept the policy rate unchanged at 11.5 percent, in line with market expectations.

In a poll conducted by Topline Securities, 84 percent of respondents expect the policy rate to remain unchanged on Sep 14, 2026 MPC meeting. Meanwhile, 14 percent expect policy rate to rise by 50bps and 2 percent expect policy rate to rise by 100bps.

READ MORE: SBP holds key policy rate at 11.5pc

Market participants expectations are largely driven by annual inflation expectations which at current oil prices USD 95 per barrel remains largely below 9 percent (FY27 avg), suggesting positive real spread of over 250bps, in line with historic real rates. Furthermore, improving reserves and contained current account balance are also augmenting the status quo view of participants.

According to Topline Securities, since the last meeting, market expectations for interest rates have broadly remained stable, however, risk outlook has increased amidst elevated oil prices.

Recent hike in tensions between the US and Iran have renewed uncertainty in oil prices. The domestic petrol prices since last monetary policy have also increased by Rs24 per liter. While diesel prices have declined by only Rs2 per liter despite capping the crack margins at USD 41.9 per barrel.

Status quo expectations also evident from current secondary market yields of 3M and 6M T-bills, which are trading at 11.41 percent and 11.68 percent, largely unchanged from last MPC.

Analysts at Topline also expecting the State Bank to maintain the policy rate at 11.5 percent in its Sep 14, 2026 MPC meeting mainly due to sufficient real spread, and improving external outlook specially after recent USD 3 billion Eurobond launch.

However, if oil prices and food inflation remains sticky, this could also warrant a rate hike of 50-100 in upcoming MPC meetings i.e. Oct or Dec 2026.

Topline Research also conducted a poll of key market participants on their expectations for the policy rate, average inflation, and PKR/USD parity. “We also expect the policy rate to remain unchanged at 11.5 percent until Mar 2027. However, if oil prices remain above USD95 per barrel and food inflation stays elevated, we may see a 50-100bps hike in subsequent meetings”, the report said.

Copyright Business Recorder, 2026