The State Bank of Pakistan (SBP) maintained its policy rate on Monday at 11 per cent, after many analysts cited inflation risks from rising global commodity prices amid Iran-Israel tensions.

The central bank’s policy rate, after being slashed by 1,000bps from 22pc since June 2024 in seven intervals, was cut to 11pc last month.

Several brokerages had initially expected a cut but revised their forecasts after the Israeli strikes sparked fears of a broader conflict.

The escalating hostilities after Israel’s attacks on Iran on Friday had triggered a sharp spike in oil prices — a worry for Pakistan given the broader impact on imported inflation from a potentially prolonged conflict and tightening of crude supplies.

Eleven of 14 respondents in a snap poll by Reuters expected the SBP to leave the benchmark rate unchanged at 12pc. Two forecast a 100 basis-point (bps) cut and one predicted a 50bps cut.

“There remains an upside risk of a rise in global commodity prices in light of geopolitical tensions, which could mark a return to inflationary pressures,” said Ahmad Mobeen, senior economist at S&P Global Market Intelligence.

---

More to follow