SBP announces monetary policy today; interest rate likely to be slashed into single digit

KARACHI: The State Bank of Pakistan (SBP) is set to unveil its first monetary policy of 2026 today, with expectations growing that the central bank may slash the benchmark interest rate into single digits for the first time in four years.

The decision comes amid signs of easing inflation, stable foreign exchange reserves, and improving economic indicators.

A crucial meeting of the Monetary Policy Committee (MPC) is being held at the SBP’s Karachi headquarters, where policymakers are conducting a detailed review of inflation trends, economic growth projections, remittance inflows, and other critical macroeconomic factors before finalising the new rate. The outcome will be officially announced by SBP Governor Jamil Ahmed in a press conference later in the day.

In the last monetary policy review of 2025, the SBP had reduced the base rate by half a percentage point, bringing it to 10.5%. Recent developments, however, suggest the central bank may take bolder action this time. Treasury bill auctions have shown a notable decline in government borrowing costs, with rates dropping into single digits for the first time in four years – a clear signal that monetary easing could be on the horizon.

Economists say the possibility of a half- to one-percentage-point cut is strengthened by steady foreign exchange reserves, a controlled inflation trajectory, and rising remittance inflows from overseas Pakistanis. Such a move would not only ease borrowing costs for businesses and consumers but could also stimulate economic activity and investment in a country looking to bolster growth.

With the MPC’s decision highly anticipated by markets, banks, and investors alike, today’s announcement could set the tone for Pakistan’s economic strategy in the first half of 2026 and beyond.