The Monetary Policy Committee of the State Bank of Pakistan on Monday reduced the policy rate by 50 basis points to 10.5%, defying widespread market expectations of a status quo.
In a statement, the central bank said the revised policy rate will take effect from December 16, 2025.
Market participants had largely anticipated no change in the policy stance. Arif Habib Limited had expected the SBP to hold rates, citing fading base effects that had kept headline inflation low, a slight widening of the current account deficit, and the early stage of domestic economic recovery.
A Reuters poll of 12 analysts had also projected no rate cut, with respondents pushing expectations for easing to the later months of FY26 or beyond. The poll noted that analysts had revised their forecasts after the International Monetary Fund warned that inflation risks remain and monetary policy should stay appropriately tight.
Most analysts surveyed expected the SBP to delay the start of an easing cycle until the closing months of FY26, ending in June 2026, with some extending expectations into fiscal year 2027.
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