Pakistan's Central Bank Holds Steady Amid Rising Geopolitical Tensions

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.

(With inputs from agencies.)