THE State Bank has surprised the market by slashing its policy rate by 50 basis points to 10.5pc. The move is underpinned by its assessment that the inflation outlook remains broadly unchanged. Benign global commodity prices and well-anchored inflation expectations, supported by a prudent monetary policy stance, have provided the necessary ‘space’ for easing.

Most financial analysts had, however, pushed back rate-cut forecasts to the later part of the second half of FY26 following the IMF’s warning that inflation risks persisted and policy must stay “appropriately tight and data-dependent” to keep expectations anchored. The Fund expects inflation........

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