The State Bank of Pakistan (SBP) is set to announce its first monetary policy of 2026 today, Monday, January 26, with the Governor holding a press briefing to reveal key decisions on the benchmark interest rate. The Monetary Policy Committee (MPC) will meet at 10:30 AM to finalize policy rates for the next two months, taking into account inflation trends, rupee stability, remittances, exports, trade balances, and overall economic growth.
Currently, the benchmark interest rate stands at 10.5 percent following a 50-basis-point reduction in December 2025. Analysts predict that the MPC may announce a further cut today due to the strengthening Pakistani rupee, controlled inflation levels, and improving external sector performance.
A recent survey of economists and market participants shows that 80 percent expect a policy rate reduction. Around 56 percent anticipate a 50-basis-point cut, 15 percent foresee a 1 percent reduction, 5 percent expect a 25-basis-point cut, while 3 percent predict a 75-basis-point reduction. The remaining 20 percent expect rates to remain unchanged. Analysts say sustained rupee gains, rising remittances, and lower inflation could see the policy rate drop below 10.5 percent by mid-2026.
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During today’s session, the MPC will also review large-scale manufacturing output, fiscal and trade deficits, global oil prices, crop production, and foreign exchange reserves. These indicators will help determine the optimal policy stance to balance growth, inflation, and financial stability.
Waqas Ghani, Head of Equity Research at JS Global Capital, said the SBP now has room to stimulate growth while keeping a close eye on persistent non-food inflation. Some experts advocate for a more aggressive 75-basis-point cut, arguing that macroeconomic conditions are favorable, with stable reserves and inflation within the SBP’s 5–7 percent target. A 50-basis-point cut would reduce the policy rate to 10 percent, continuing the central bank’s easing cycle from a peak of 22 percent in 2023, following cumulative cuts of 1,150 basis points since mid-2024.
Fresh data shows annual inflation slowed to 5.6 percent, aided by falling prices of perishable foods, although core non-food inflation remains sticky. SBP officials emphasized that headline inflation could spike toward the fiscal year-end due to base effects, highlighting the need for careful policy calibration.
The market will closely watch today’s announcement, which will shape investor sentiment, borrowing costs, and the overall economic outlook for Pakistan in early 2026.
