SBP to Adopt Cautious Approach Amid Inflation Concerns

Karachi: The State Bank of Pakistan (SBP) is expected to adopt a cautious stance in its upcoming Monetary Policy Committee meeting, according to a recent report by AKD Securities Limited. This approach comes in response to emerging inflationary concerns and rising geopolitical tensions.

The report anticipates that inflation will remain at the lower end of the SBP’s medium-term target range of 5-7% in the fiscal year 2026. This outlook persists despite a recent surge in food prices, which AKD Securities views as temporary.

AKD Securities also notes that the potential impact of floods and above-average rainfall is likely to be contained. The effective diversion of floodwaters at critical barrages and early disposal of rainwater are cited as key factors in mitigating these effects.

Additionally, the report highlights expectations of a stronger Pakistani currency. This is attributed to robust remittances, an adequate foreign exchange cushion, and renewed access to international markets, which are seen as instrumental in keeping persistent inflationary pressures at bay.