AHL Urges SBP to Maintain Policy Rate at 10.5% Amid External Supply Shocks. -

Arif Habib Limited (AHL) has issued a formal recommendation to the State Bank of Pakistan (SBP) to maintain the current policy rate at 10.5% during its upcoming monetary policy meeting. The brokerage firm contends that a rate hike under present conditions would constitute an “overcorrection” that could potentially derail the nation’s fragile economic recovery.

Economic Rationalization for Rate Stability

Supply-Side Drivers: AHL argues that recent inflationary pressures are primarily driven by external supply-side shocks—specifically the ongoing Middle East conflict—rather than excessive domestic demand.
Energy Costs: The impact of these global tensions is reflected in local energy markets, where Pakistan LNG Limited (PLL) has had to issue emergency tenders for LNG cargoes to stabilize the national grid amidst a 3,400MW shortfall.
Industrial Impact: Maintaining stable rates is seen as critical for sectors like the SITE Association of Industry, which is already struggling with a “breaking point” caused by rising security threats and extortion.