Islamabad:As the State Bank of Pakistan's Monetary Policy Committee convenes today (Monday), the Pakistan Institute of Development Economics (PIDE) has called for the policy rate to be held unchanged at 10.5 percent.
In a Policy View Point, Dr Irem Batool, Amna Riaz, and Dr SM Naeem Nawaz argued that the central question before the committee is no longer whether inflation has fallen far enough from its 2023 peak to permit easing but whether Pakistan can safely ease at all into a period of renewed geopolitical and commodity-market stress.
The report’s answer is an unambiguous no. The inflation picture alone counsels restraint. Headline CPI rose to 7.3 percent year-on-year in March 2026, reversing February's 7.0 percent reading, while rural core inflation climbed to 8.4 percent -- driven by supply-chain inefficiencies, higher transport costs and the outsized weight of food in rural consumption baskets.
The March uptick is troubling not just in magnitude but in timing: prices firmed precisely as energy risks were intensifying, raising the prospect that fuel, freight and import-cost pressures could broaden further.
Cutting rates in this environment, it warns, risks signaling that the State Bank is prioritising short-term sentiment over its inflation-anchoring mandate -- a perception costly to reverse.
