State Bank likely tohold rate at 11%

KARACHI:

Pakistan's central bank is expected to keep its key interest rate unchanged at 11% on Monday, a Reuters' poll showed, as analysts said flood-driven food inflation and a low base effect are likely to limit the scope for further monetary easing.

All 10 analysts surveyed expect the State Bank of Pakistan (SBP) to keep the policy rate unchanged, extending its pause as recent floods ravaged farmland and border closures with Afghanistan drove up prices of staples like tomatoes and apples.

"An elevated inflation reading in September, incorporating the impact of the recent floods, is likely to incline the MPC (monetary policy committee) to keep the policy rate at the same level," said Fawad Basir, Head of Research at KTrade, adding that the next cut was likely in the last quarter of FY26, starting July 2025.

Since October 11, border closures with Afghanistan following clashes have disrupted trade and deepened food shortages, intensifying inflationary pressures. The SBP last held rates in September, warning floods could push inflation above its 5-7% target.