Islamabad: The State Bank of Pakistan (SBP) is widely expected to cut its key policy rate by 50 basis points to 10.5% in its upcoming monetary policy decision on Wednesday, according to a Reuters poll of 14 analysts.
All analysts surveyed predicted a rate cut, with the majority forecasting a 50 basis point reduction. Four participants expected a deeper cut of 100 basis points, while one projected a modest 25 basis point adjustment.
The anticipated move comes as inflation continues to ease, creating room for further monetary policy easing. Consumer price inflation stood at just 3.2% in June, while average inflation for FY2025 fell to 4.49%, the lowest in nine years and a significant drop from 23.4% the previous year.
Analysts noted that real interest rates remain firmly positive, and with the external account stabilising, the SBP has room to continue its easing cycle. However, some warned that rising imports and renewed pressure on the rupee could call for a more cautious, data-driven approach in the second half of the year.
Reserves have crossed USD 14 billion, supported by inflows from the International Monetary Fund (IMF) under the USD 7 billion programme, as well as bilateral financing.
The SBP began its rate-cutting cycle in June 2024 from a record high of 22%, delivering cumulative cuts of 10 percentage points before pausing in March 2025. It resumed with a 100 bps cut in May but held steady in June amid geopolitical tensions in the Middle East.
Earlier this month, SBP Governor Jameel Ahmad told the Reuters NEXT Asia summit that the central bank would maintain a “tight” stance to keep inflation within its 5–7% target range, but acknowledged that current monetary conditions were already influencing inflation and the external account.
Economists expect further easing through 2025, but at a measured pace. Ahmed Mobeen of S&P Global Market Intelligence said rising import demand and global commodity price risks could slow the pace of rate cuts going forward.
Mustafa Pasha, Chief Investment Officer at Lakson Investments, projected that the SBP could gradually bring rates into the high single digits by early 2026, as macroeconomic indicators continue to improve and key IMF reviews are completed.
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