SBP Rate Decision Split as MPC Meeting Nears

SBP faces split market expectations before its June 15 MPC meeting as oil prices, inflation outlook and money-market yields shape policy sentiment.

Key Takeaways

• The State Bank of Pakistan will hold its next Monetary Policy Committee meeting on June 15, 2026.
• A Topline Securities survey shows expectations evenly divided between a rate hold and another rate hike.
• Global oil prices remain the biggest risk after Brent crude fell from $118 to around $93 per barrel.
• Six-month T-bill and KIBOR yields show a modest tightening bias before the policy announcement.
• Topline expects the policy rate to remain unchanged and projects FY27 inflation at 8-8.5 percent.

SBP Faces a Difficult Call Before June 15 Meeting

The State Bank of Pakistan is heading into its final Monetary Policy Committee meeting of FY26 with no clear market consensus. The meeting is scheduled for Monday, June 15, 2026, and investors, banks and businesses are closely watching whether the central bank will hold the policy rate or raise it again.

The uncertainty follows the previous MPC meeting held on April 27, 2026, when the SBP increased the policy rate by 100 basis points. That move was broadly in line with market expectations, as a Topline Securities poll showed 53 percent of participants expected a hike because of geopolitical tensions between the United States and Iran.

This time, the policy debate is more balanced. The outcome will show how the SBP views inflation risks, oil-price pressure, exchange-rate stability and the broader economic outlook as Pakistan moves into FY27.

Market Survey Shows Equal Split on Rate Outlook

According to the latest Topline Securities survey, 49 percent of respondents expect the SBP to keep the policy rate unchanged on June 15. Another 49 percent expect a rate hike. Within the hike camp, 34 percent expect a 50 basis point increase, while 15 percent expect a 100 basis point rise. Only 2 percent expect a rate cut of up to 50 basis points.

The survey shows that the market is not fully convinced in either direction. Those expecting no change point to relatively stable regional conditions compared to the previous policy cycle. Those expecting a hike believe the central bank may still need to stay cautious because of oil-price volatility and money-market signals.

Topline itself expects the policy rate to remain unchanged in the upcoming MPC meeting. Its view suggests that the current level of monetary tightening may be considered enough for now if global oil prices remain contained and geopolitical tensions do not worsen sharply.

Oil Prices Remain the Biggest Risk for Policy Makers

The biggest source of uncertainty is global oil. Pakistan is highly exposed to imported energy costs, and any sharp increase in crude prices can affect fuel prices, inflation, external payments and the rupee. The research note says diplomatic efforts and mediation attempts have helped stabilize markets in recent weeks.

Brent crude previously touched a high of $118 per barrel on April 29, 2026, during the peak of tensions. It is now trading around $93 per barrel and has stayed below $100 for the past two weeks. Repeated assurances about a possible early resolution of geopolitical tensions have also helped calm sentiment.

For the SBP, this creates a difficult balance. If oil stays near current levels, the central bank may have room to wait. But if prices rise again, the MPC could prefer a pre-emptive hike to protect inflation expectations and external stability.

Money-Market Yields Point to Modest Tightening Bias

Secondary market indicators are also shaping expectations. Yields on 6-month T-bills and 6-month KIBOR are currently around 12.42 percent and 12.50 percent, respectively. These rates have increased by 92 and 106 basis points since the last MPC.

Analysts believe this upward move reflects expectations of a possible 50 to 75 basis point adjustment. In simple terms, while survey responses are evenly split, money-market pricing appears more cautious and is leaving room for further tightening.

For businesses and borrowers, this matters because expectations affect financing costs even before the central bank announces its decision. Higher benchmark yields can influence bank lending rates, working capital costs and investment planning.

Inflation and Rupee Outlook Shape FY27 Expectations

Topline Research also surveyed participants on the policy rate outlook for December 2026. Around 53 percent expect rates above 11.5 percent, 31 percent expect rates at 11.5 percent, and 16 percent expect rates below 11.5 percent.

On inflation, 20 percent expect FY27 inflation above 10 percent, 30 percent expect 9-10 percent, 26 percent expect 8-9 percent, 20 percent expect 7-8 percent and 5 percent expect below 7 percent. Despite these mixed views, Topline projects average FY27 inflation at 8-8.5 percent.

The exchange-rate outlook appears comparatively stable. About 39 percent of respondents expect the rupee between Rs. 285 and Rs. 290 per US dollar, while 36 percent expect Rs. 280-285. Topline projects the PKR/USD rate at Rs. 283-286 by December 2026. Overall, the survey points to cautious stability rather than aggressive easing.