Will the policy rate stay put?
EDITORIAL: The Monetary Policy Committee meeting to review the 11.5 percent policy rate is scheduled for 26 October and there are serious concerns that the rate may be raised as inflation remains in double digits due largely to the rise in the international prices of petroleum and products as the Middle East conflict will enter eighth month on the 1 November. In May, the Consumer Price Index…
The Monetary Policy Committee is set to meet on October 26 to evaluate the 11.5 percent policy rate amid inflation concerns. Inflation, driven largely by international oil price rises due to the Middle East conflict, remains in double digits. The Consumer Price Index (CPI) peaked at 11.7 percent in May and has fluctuated between 9.2 percent in July and 11.1 percent in August.
Notably, core inflation has remained more stable, between 8.6 percent in September and 8.8 percent in August 2026. This discrepancy between inflation and the policy rate is attributed to various factors, including the pace of government consumption growth outpacing household consumption, and the government's significant borrowing status.
Additionally, concerns about data credibility persist, with the IMF providing technical assistance for improvements in data measurement. Despite these challenges, economists remain divided on whether the policy rate will be adjusted, potentially influenced by discussions with the International Monetary Fund. Data integrity and the effectiveness of proposed policies are questioned, especially in addressing poverty, with 44.7 percent of Pakistanis currently below the poverty line.
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