SBP Interest Rate Decision Today: Markets Expect Hike to 12% as Inflation Stays High

SBP Interest Rate Decision Today: Markets Expect Hike to 12% as Inflation Stays High

Pakistan's central bank decides its key interest rate today, with most market watchers expecting a hike. The State Bank of Pakistan's Monetary Policy Committee meets on Monday, October 26, and Bloomberg reporting suggests it is likely to raise the policy rate by 50 basis points to 12%, from 11.5%.

The case for a hike rests on stubborn inflation. Prices have risen at double-digit rates in five of the past six months, well above the bank's 5-7% target, with headline inflation at 11.1% in August, up from 9.2% in July, and core inflation at 8.7%. Higher oil prices, a 9% jump in wheat prices over four weeks and a September import bill of $6.17 billion have added to the pressure. A Topline Securities poll found 61% of market participants expect a hike, most of them by 50 basis points.

Not everyone agrees. Business groups, including importers, have urged the bank to cut rates instead, arguing that expensive borrowing is squeezing industry and trade. The bank has held the rate at 11.5% since its last move, citing Middle East tensions and supply disruptions. Whatever it decides today will feed straight into household and business borrowing costs across the country — and the announcement is due later today, so this is the market's expectation, not the result.

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