'More rate hikes may follow'

The State Bank of Pakistan lifted its policy rate by 50 basis points to 12%, and economists quoted by The Express Tribune say further increases remain possible. Their concerns centre on inflation, which reached 10.3% in September, and continued pressure from energy and food prices.

SDPI economist Dr Abid Qaiyum Suleri said persistent energy costs could leave little scope for rate cuts, while SDPI’s Dr Sajid Amin Javed warned of gradual hikes over the next three to four months if oil prices stay high. PIDE economist Dr Nasir Iqbal argued that higher rates cannot directly resolve supply-driven price pressures and could raise borrowing costs, restrain investment and weigh on growth.

The SBP forecasts 3.5-4.5% growth in fiscal year 2027, while Javed expects inflation of 11-13% and growth below 3.5% in fiscal year 2026-27. The economists’ differing views highlight the policy challenge of containing inflation without adding to pressure on businesses and economic activity.