May 02, 2025 (MLN): The State Bank of Pakistan (SBP) is widely expected to maintain its policy rate at 12%, despite room for easing, according to Bloomberg Economics.
The central bank's cautious stance will likely be driven by its commitment to financial stability amid ongoing economic uncertainties.
Policymakers are likely to wait until the unveiling of the fiscal 2026 budget, which may introduce new indirect taxes with inflationary consequences.
Another critical factor influencing the SBP’s decision is Pakistan’s trade deficit. Imports surged to $15 billion in Q1 2025, marking the highest level since Q3 2022.
This sharp increase raises concerns over external balance, prompting the central bank to adopt a wait-and-see approach.
Additionally, the SBP is expected to delay any rate adjustments until Pakistan secures its next IMF loan tranche, which would help strengthen foreign exchange reserves.
Rising geopolitical tensions and currency volatility further complicate the outlook.
Bloomberg Economics suggests that trade risks and uncertainty in global financial markets could pressure policymakers into delaying monetary easing until conditions stabilize.
Although there is theoretical scope for a rate cut, analysts believe that financial stability will take precedence over short-term growth incentives.
