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KARACHI:

The State Bank of Pakistan (SBP) is expected to retain interest rates at 11% on Monday, a Reuters poll showed, as analysts push back rate-cut forecasts to late 2026 after the International Monetary Fund (IMF) warned inflation risks persist and policy must stay “appropriately tight”.

All 12 analysts surveyed expect no cut in the policy meeting on Monday. A majority of them see inflation hovering at 6%-8% in the coming months before rising again towards the end of fiscal 2026 as base effects fade and food and transport prices stay volatile after flood-related supply disruptions.

Most respondents now believe the central bank will not begin easing until the closing months of FY26, which ends in June 2026, with some analysts pushing forecasts for the first cut into fiscal year 2027, beginning July 2026.

The IMF, in a second review released on Thursday, said monetary policy needs to remain “appropriately tight and data-dependent” to keep expectations anchored and noted that the SBP had maintained positive real interest rates on a forward-looking basis.

It said the tight stance had been pivotal in reducing inflation and should be maintained to ensure price stability and support the rebuilding of external buffers.

Analysts said these risks, along with the SBP’s preference for maintaining positive real interest rates, would keep policymakers cautious.

The SBP has held its policy rate at 11% since September, after cutting it by 1,100 basis points between June 2024 and May 2025 as inflation fell sharply from highs near 40% in 2023.

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The Republican chair of the US House of Representatives’ China committee has questioned the information on which the White House based its recent decision to allow Nvidia to export advanced chips to China.

John Moolenaar, the Michigan Republican who heads the influential China panel, cast doubt on arguments that China’s most advanced chips, which are manufactured by Huawei, rivalled those of Nvidia.

President Donald Trump this week said he would allow Nvidia to sell the H200 — its second most powerful chip — to China despite concerns from some US security officials that it would propel Chinese advances in artificial intelligence that would help accelerate its military’s modernisation.

Nvidia chief executive Jensen Huang has argued Huawei has made such progress in developing chips that it makes no sense to restrain the US company from competing in China.

But critics say Nvidia is overstating the progress that Huawei has made as part of a lobbying campaign.

“Huawei has sought to end-run US technology controls by linking ever-greater numbers of less-capable chips together to achieve individual service output comparable to Nvidia’s results,” Moolenaar wrote in a letter to commerce secretary Howard Lutnick obtained by the Financial Times.

Moolenaar noted Huawei had argued that its flagship chip — the 910C — was a “genuine competitor” to Nvidia and some in the US have relied on that claim to justify exporting advanced chips to China in an effort to make Beijing more reliant on the American AI “tech stack”.

The Michigan lawmaker said Huawei was “less willing to acknowledge” that the 910C was manufactured in Taiwan by TSMC, something that is now prohibited after the commerce department determined it had violated American export controls.

Moolenaar said Huawei’s next design chip — the 910D — would have to be manufactured in China and had less advanced capabilities than the 910C.

“Given China’s relentless indigenisation drive, the fact that the 910D is a step backward in capability represents a tacit admission that China’s domestic fabs, without the benefit of illegal production abroad, are not yet able to replicate the 910C’s sophistication at scale,” he wrote.

Moolenaar also cited reports that DeepSeek, the Chinese AI champion, was having to rely on smuggled Nvidia chips to continue training its AI models.

“Approving the sale of cutting-edge chips to Chinese companies risks undercutting the extraordinary strategic advantage that President Trump achieved in his first term,” he said.

Moolenaar added that allowing China to buy millions of chips that were more advanced than its indigenous versions would undermine Trump’s efforts to ensure that the US maintained its dominance in the AI industry.

He also requested a briefing from Lutnick about the analysis used to justify allowing Nvidia to export the H200 to China.

A bipartisan group of six senators, including Republican Pete Ricketts and Democrat Chris Coons, have introduced a bill that would bar the US from providing H200 export licences for 30 months. Its co-sponsors include Republicans Tom Cotton and Dave McCormick.

Mark Warner, the Democratic vice-chair of the Senate intelligence committee, on Friday told the Defense Writers Group that “it was a mistake” to allow Nvidia to export the H200 chips to China.

Several people familiar with the debate in Congress said Republicans were very frustrated with the decision but were reluctant to criticise the move because they were nervous about a backlash from Trump.

Asked about the letter, Nvidia said critics had made similar arguments about the H20, a less-capable chip that the company developed for the Chinese market, which it dismissed as being “backwards”. Trump banned Nvidia from selling the H20 before later reversing course.

“Before the ban, selling H20 kept foreign competition at bay,” Nvidia said. “After H20 shipments were blocked, foreign AI chip firms stepped into the gap and grew dramatically — so much that when we were allowed to resume H20 shipments, we had no takers.”

The company added that critics of the administration and foreign competitors were trying to exclude US industry from a commercial business that “should provide America tens of billions of dollars and thousands of real jobs”.