Pakistan's Central Bank Holds Steady Amid Rising Geopolitical Tensions

Pakistan's central bank is likely to keep the policy rate unchanged as geopolitical tensions rise due to Israel's strike on Iran. Inflation concerns arise with rising global commodity prices, posing risks to Pakistan's economy. Analysts adapt forecasts, expecting no rate change to combat inflation risks.

Pakistan's central bank is anticipated to maintain its policy rate on Monday, as a Reuters poll reveals. Many analysts revised their previous expectations of a rate cut following Israel's military action against Iran, citing concerns over inflation due to escalating global commodity prices.

Initially, several brokerages predicted a rate cut but reassessed their forecasts after the Israeli strikes, which stirred fears of a broader conflict. This tension triggered a significant increase in oil prices, raising inflation worries for Pakistan, given a potential prolonged conflict's impact on imported inflation and tightening crude supplies.

Pakistan's economy, having been stabilized under a $7 billion IMF bailout, confronts new challenges. In a snap poll, 11 out of 14 respondents expected the State Bank of Pakistan to keep the benchmark rate at 11%. With geopolitical tensions reintroducing inflationary pressures, the central bank's decision reflects a strategic stance amid global uncertainties.