Pakistan Economy SBP Rates Inflation Update Oil Prices Monetary Policy — State Bank of Pakistan monitors inflation and oil prices while keeping key policy rate steady amid economic pressures.

SBP holds policy rates as oil price surge clouds inflation

SBP expected to hold interest rates as rising oil prices and regional tensions keep inflation pressures high in Pakistan.

By Fahad On Mar 5, 2026

The State Bank of Pakistan (SBP) is likely to keep its key policy rate unchanged at its upcoming Monday review, according to a Reuters poll. Analysts say rising global energy prices and regional tensions are making it difficult for the central bank to consider rate cuts.

All 10 experts surveyed by Reuters expect the SBP to maintain the rate at 10.5%, following the previous hold in January. Since mid-2024, the SBP has cut rates by a total of 11.5%, down from a record high of 22%.

Tensions in the Middle East, triggered by US and Israeli strikes on Iran, have raised concerns about disruptions to shipping through the Strait of Hormuz. This has driven oil and gas prices higher, adding pressure to Pakistan’s import costs and inflation.

Analysts predict inflation could average between 6% and 8% in the coming months, though surging oil prices could push it even higher. “Energy costs will likely determine the path of policy rates. Inflation may average around 7% in the second half of FY26,” said Muhammad Aliv of AKD Securities.

Pakistan’s reliance on imported fuel makes it particularly sensitive to global price shocks. “Higher oil prices widen the trade deficit and put pressure on the rupee,” noted Waqas Ghani, head of research at JS Capital.

Ghani said every $10 per barrel increase in crude prices adds about 0.5% to inflation, which clocked in at 7% in February, jumping from 5.8% in January.

The SBP ⁠says it aims to maintain a positive real interest rate to anchor inflation expectations under Pakistan’s $7 billion IMF programme, though inflation could exceed its 5%–7% target range for a few months this year as growth ⁠picks up and imports widen the trade deficit.

Governor Jameel Ahmad told Reuters last month policymakers remained focused on medium-term price stability, even as the economy was projected to grow 3.75%–4.75% in ⁠the financial year 2026, supported by stronger domestic demand and earlier monetary easing.

Update on Petrol Supply in Pakistan amid Iran War

Analysts said external risks, including higher oil prices, rupee pressure and a widening trade deficit, could delay any move toward further monetary easing.