The ongoing Iran war has driven a surge in global oil prices, pushing Pakistan toward a potential interest rate hike, according to a survey by brokerage firm Topline Securities. The survey, conducted ahead of the Monetary Policy Committee (MPC) meeting on April 27, 2026, indicates that 53 percent of respondents expect the State Bank of Pakistan (SBP) to increase the key policy rate.
Survey Details and Expectations
Of the 53 percent expecting a hike, 41.2 percent anticipate an increase of 50 to 100 basis points (bps), while 10 percent expect a 25-50 bps rise. Only 2 percent foresee an increase exceeding 100 bps. Among the remaining 47 percent of participants, 43 percent expect no change, and 4 percent predict a decrease of 50-100 bps.
Topline Securities noted a significant shift from its previous poll, where 92 percent expected rates to remain unchanged, as the Iran war was in its early stages. However, the conflict, which began on February 28, 2026, has persisted for nearly two months with no peace deal between the US and Iran.
Impact of Rising Oil Prices
Pakistan imports most of its energy needs from the Middle East, making domestic inflation highly sensitive to global fuel price fluctuations. The brokerage firm stated, “We also expect interest rates to increase by 50bps in the current monetary policy to absorb the impact of rising oil prices and its indirect/lagged impact on other commodities and to contain non-essential imports.” The SBP had kept the policy rate unchanged at 10.5 percent during the March MPC meeting despite surging energy prices and regional tensions.
Regarding global oil price expectations, 59 percent of respondents believe prices will remain above $80 per barrel, while 41.2 percent expect them below $80. For the interest rate target by December 2026, 59 percent expect the policy rate to stay above 10.5 percent, 29 percent expect it at 10.5 percent, and 6 percent anticipate 10 percent or below.
Market Sentiment and Analyst Views
Chase Securities, another brokerage firm, noted that market participants are divided on the interest rate outlook. “With oil prices holding firm, inflation expectations are tilting upwards, with a likelihood of double-digit readings in the coming months,” Chase Securities said. The firm highlighted that the MPC faces a delicate balancing act between acting preemptively with a rate hike or waiting for more clarity.
Chase Securities added, “A 100bps increase appears largely priced in; therefore, any decision to keep rates unchanged could trigger a positive market reaction in the short term, while a hike may be taken in stride given current expectations.” The MPC meeting is underway, and the decision is awaited with keen interest from markets and businesses.
