State Bank announces New Monetary Policy today; Here’s What to Expect

Pakistan's State Bank (SBP) is set to announce its new monetary policy today, with a majority of financial market participants anticipating an interest rate increase due to mounting inflation fears and soaring global oil prices. The Monetary Policy Committee (MPC) faces a difficult decision between controlling inflation and protecting an economy already struggling with expensive borrowing and rising business costs. The benchmark interest rate currently stands at 11.5%, and leading financial institutions predict an increase to 12% or even 12.5%, largely driven by the continuing conflict in the Middle East disrupting energy supplies. A recent survey indicates that nearly two-thirds of market participants expect a rate hike, with 54% anticipating a 50-basis-point increase. This decision will impact businesses, investors, and ordinary citizens, making new borrowing more expensive and increasing repayments on floating-rate loans.