ISLAMABAD: The Pakistan Institute of Development Economics (PIDE) has urged the central bank to keep the policy rate unchanged at 10.5% ahead of the upcoming monetary policy meeting.
According to Beyond Time News, PIDE believes there is no immediate need to raise or cut interest rates at this stage.
No Urgent Need for Rate Change
In its latest policy viewpoint, PIDE experts stressed that the focus has shifted. The key question now is not whether inflation has declined, but whether it is safe to ease policy amid global uncertainty.
They advised the State Bank of Pakistan (SBP) to maintain the current rate. They also noted that the committee can review the situation again in about six weeks.
Inflation Still a Concern
PIDE highlighted that inflation showed signs of rising again. The Consumer Price Index (CPI) increased to 7.3% in March 2026, compared to 7.0% in February.
At the same time, rural inflation climbed to 8.4%. Experts linked this rise to higher transport costs, supply chain issues, and increased food prices.
They warned that energy risks could push inflation even higher. Therefore, cutting rates too early could send the wrong signal and weaken confidence in monetary policy.
Growth Shows Stability
Meanwhile, economic growth has improved. Pakistan’s GDP grew by 3.89% in the second quarter of the fiscal year. The industrial sector also expanded by 7.4%.
PIDE noted that the economy is recovering steadily. Because of this, it does not need immediate support through rate cuts.
Read more:ICCI Calls for Balanced Growth Across All Sectors
Global Risks Add Pressure
Global tensions, especially in the Middle East, have increased economic risks. Rising oil prices and disruptions in key shipping routes have pushed up import and transport costs.
These factors could affect fuel prices, electricity costs, and food inflation in the coming months.
Although a temporary ceasefire helped ease pressure, PIDE warned that the situation remains uncertain.
Balanced Approach Recommended
PIDE concluded that maintaining the current policy rate is the best option for now. It said a rate cut could increase inflation risks, while a rate hike is not necessary at this stage.
Experts recommended a cautious approach with close monitoring of global and domestic trends. They also suggested keeping the option of a rate hike open if inflation rises sharply.
Overall, PIDE emphasized that a stable policy rate will help control inflation and support long-term economic stability.
