Pakistan’s improving currency position and easing inflation have strengthened expectations of a further cut in the policy interest rate in the country’s upcoming monetary policy announcement, according to a survey conducted by a local research institution.
The State Bank of Pakistan (SBP) is scheduled to announce the first monetary policy of the year on January 26. Market sentiment appears largely tilted toward monetary easing, with a strong majority of survey participants forecasting a reduction in the benchmark interest rate.
According to the survey findings, around 80 percent of respondents expect the central bank to lower the policy rate in the new monetary policy. Among them, 56 percent anticipate a cut of 50 basis points, while 15 percent believe the SBP may opt for a deeper reduction of 100 basis points.
Meanwhile, 20 percent of the participants expect the policy rate to remain unchanged, reflecting caution amid lingering economic uncertainties. Another 5 percent foresee a modest cut of 25 basis points, while only 3 percent expect a reduction of 75 basis points.
The survey also highlighted expectations over the medium term. Nearly 49 percent of respondents believe the policy rate will remain at around 10 percent until June 2026, whereas 46 percent expect it to fall below 10 percent by that time.
Analysts cited in the survey pointed to continued appreciation of the Pakistani rupee, rising workers’ remittances, and a sustained decline in inflation as key factors supporting further monetary easing. The report projected that these trends could push the policy rate below 10.5 percent in the coming months.
The Monetary Policy Committee had last reduced the policy rate by 50 basis points in its meeting on December 15, signaling the beginning of a cautious easing cycle after a prolonged period of tight monetary conditions.
