Monetary Policy survey reveals key insights amid regional tensions

According to Topline Pakistan Research, a recent survey it conducted indicates a prevailing sentiment among market participants regarding the stability of the policy rate amid escalating regional tensions. With the State Bank of Pakistan (SBP) poised to hold its second Monetary Policy Committee (MPC) meeting on March 9, 2026, 92% of respondents anticipate no change to the current policy rate.

This shift in expectations comes as Brent oil prices have surged by 25% in recent weeks, attributed to heightened geopolitical tensions in the region. The findings contrast sharply with a previous survey from January 2026, where 80% expected a rate cut. Now, the focus has shifted to maintaining the status quo, with only 8% of respondents anticipating a rate increase—6% forecasting a rise of 25-50 basis points and 2% expecting an increase of up to 100 basis points. “Given the current situation, it seems prudent for the SBP to hold rates steady to assess the full impact of rising oil prices and potential shortages on domestic inflation,” commented a spokesperson from Topline Research. “However, should these tensions persist, a rate hike cannot be ruled out.”

Responses also highlighted concerns regarding the longevity of the conflict involving Israel, the U.S., and Iran, with 62% of participants predicting it would last between 2 and 5 weeks. Additionally, secondary market yields for 6M T-bills and 6M KIBOR have risen by 85 basis points and 58 basis points, respectively, reinforcing expectations of a stable monetary policy.

On oil prices, 44% of respondents forecast a $80-90 per barrel range, while 38% expect prices to escalate to the $90-100 range. This projected increase in oil prices aligns with inflation expectations, with 58% expecting inflation to remain between 7-8%.

Looking ahead, 60% believe the policy rate will remain at 10.5% by June 2026, with 48% anticipating the Pakistani Rupee will trade between Rs280-285 against the US dollar.

As the banking community prepares for the upcoming MPC meeting, the uncertainty surrounding regional conflicts continues to shape economic forecasts for the nation.