Inflation Risks and Geopolitical Tensions Shape Pakistan's Monetary Policy
Pakistan's central bank is likely to hold its policy rate steady as geopolitical tensions escalate following Israel's military strike on Iran, raising global commodity prices and inflation risks. Analysts emphasize potential impacts on Pakistan’s economy with adjustments in the State Bank's rate influenced by external pressures.
Pakistan's central bank is anticipated to maintain its policy rate unchanged, a recent Reuters poll indicated. This decision comes as analysts moved away from expected cuts due to growing concerns over inflation, prompted by Israel's recent military action against Iran.
The Israeli strikes, targeting key nuclear and military sites, have heightened fears of conflict escalation, impacting global oil prices—a significant concern for Pakistan because of its dependency on oil imports and resultant inflationary pressures.
Among 14 respondents, 11 predicted that the State Bank of Pakistan (SBP) will sustain the 12% benchmark rate. Meanwhile, revisions in the IMF-backed budget reflect hopes of economic stabilization amid ongoing fiscal challenges.
(With inputs from agencies.)
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