March 10 MPC meeting: SBP likely to keep policy rate unchanged

ISLAMABAD: The State Bank of Pakistan (SBP) is set to hold its Monetary Policy Committee (MPC) meeting on March 10, where it will review its current monetary policy stance.

While there is speculation that no major changes will be announced, the central bank may opt to keep the policy rate unchanged.

A poll conducted by Topline Securities revealed that 38 per cent of market participants believe the rates will remain steady, while 62 per cent expect a reduction of at least 50 basis points (bps).

However, analysts at Topline expect the SBP to maintain the current policy, suggesting that the MPC will likely leave rates as they are in the upcoming meeting.

Topline analysts believe the central bank has room for a cut of up to 100 bps, based on expectations that inflation in FY26 will average between 8 and 9 per cent. This would result in a real interest rate of 300-400 bps, with the current policy rate at 12 per cent. Historically, Pakistan has maintained a real interest rate of 200-300 bps.

Several factors could influence the decision to hold rates steady. An upcoming review by the International Monetary Fund (IMF) in early March, which will focus on new revenue targets and taxation measures for the budget, may have implications for the inflation outlook for FY26.

Additionally, the rising import figures over the past two months, averaging $5.2 billion in December and January, along with a 1.6 per cent depreciation of the Pakistani rupee since November 2024 in the kerb market, may prompt the central bank to pause any further rate cuts.

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