KARACHI: A majority of financial market participants expect Pakistan’s central bank to cut its key interest rate by 50 to 100 basis points at its upcoming Monetary Policy Committee (MPC) meeting on July 30, according to a new poll by Topline Securities published this week.
The findings reflect growing market confidence that declining inflation and easing global oil prices have created space for monetary easing. In its last meeting, the State Bank of Pakistan (SBP) kept the policy rate unchanged at 11 percent, citing uncertainty over the federal budget and regional tensions in the Middle East. This time, a stronger consensus appears to be building toward a rate cut.
In the latest survey, 56 percent of participants said they expect a 50-100 bps cut, compared to 44 percent in the previous poll, while 37 percent now expect no change, down from 56 percent in the last round.
Topline’s own forecast aligns with the consensus: the brokerage expects a 50 bps cut, noting that real interest rates remain elevated relative to historical averages. “With FY26 inflation expected to average between 5-7 percent, the current policy rate of 11 percent implies real interest rates of 400-600 basis points – well above the historical range of 200-300 bps,” Topline said.
The survey also offered a broader glimpse into market sentiment:
1. 51 percent of respondents expect the policy rate to fall to 10 percent by December 2025, with another 32 percent expecting 9 percent 2. On inflation, 54 percent forecast average inflation between 6-8 percent, while 27 percent see it between 4-6 percent 3. On the exchange rate, 51 percent expect the rupee to hover between Rs285-290 per US dollar by December 2025
Topline expects July inflation to fall to 3-3.5 percent, with prices staying between 3-5 percent through January 2026 before inching up to 6-8 percent through mid-2026. Pakistan’s government has set a 7.5 percent inflation target for FY26, while the IMF projects an average of 7.7 percent.
Secondary market signals also point to easing: yields on 6-month KIBOR and T-bills have dropped by 10-39 bps since the last MPC meeting. The 6M KIBOR currently stands at 10.99 percent, while the 6-month T-bill is at 10.75 percent.
