KARACHI – The Pakistan Stock Exchange (PSX) staged a recovery on Tuesday after witnessing a choppy session a day earlier as investors responded positively to the State Bank of Pakistan’s decision to maintain its policy rate at 11.5%.
During intraday trading, the benchmark KSE-100 Index moved up by 1,520.15 points, or 0.91%, to reach 169,490.80 compared to previous close of 167,97 points.
The index touched an intraday high of 169,988.11 points and recorded a low of 169,189.29 points. Trading volume stood at 28,506,331 shares, while the market remained open.
A day earlier, the central bank kept its policy rate unchanged at 11.5%, opting for caution as improving economic conditions clash with a fresh threat from rising global oil prices.
The decision was taken by the Monetary Policy Committee (MPC) at its second meeting of fiscal year 2026-27 and sixth meeting of the calendar year. For now, borrowers and businesses will see no change in the benchmark cost of borrowing. The decision also came largely as expected, with markets already leaning towards a rate hold.
Pakistan has made some progress on the external front. Foreign exchange reserves have strengthened, the current account remains relatively manageable and the country has raised $3 billion through a Eurobond, easing some pressure on its external financing position. But the improvement comes with a warning sign.
Global oil prices have moved close to $95 per barrel, raising the prospect of higher fuel costs at home. If the increase persists, it could ripple through transport, food and other consumer prices. That possibility is giving the central bank little reason to rush into monetary easing.
SBP’s latest move was hardly unexpected. A Topline Securities survey showed that 84% of respondents were betting on an unchanged policy rate of 11.5%. Meanwhile, 14% expected a 50-basis-point hike, while just 2% predicted a 100-basis-point increase.
Ismail Iqbal Securities had also expected the SBP to stay put, pointing to the delicate balance between stronger external buffers and renewed inflationary pressures.
Average inflation is projected to remain below 9% in FY27, while the current policy rate still leaves a real interest rate margin of more than 250 basis points.
