SBP likely to hold interest rate at 22% in monetary policy meeting today | Maqvi News

 

• Some finance sector player see rate unchanged.
• Other experts anticipate a 1% cut in interest rate.
• SBP hasn’t changed policy rates for lats five meetings.

The State Bank of Pakistan’s (SBP) monetary policy committee will decide on the new monetary policy rate during its meeting on Monday in Karachi, the central bank said in a statement.

The committee is set to decide the interest rate today with majority of the financial sector players expecting it to remain unchanged, while a section of experts anticipate a 1% cut.

Previously, the SBP had decided not to change the rates and kept it at 22%.

In its report last week, Reuters also reported that the central bank is likely to hold its key interest rate for the sixth straight policy meeting today as inflation risks continue to loom, but a majority of analysts expect rate cuts from the second quarter of this year.

The report added that Monday’s policy decision would be the last ahead of the April expiry of a $3 billion Stand by Arrangement with the International Monetary Fund.

The median estimate in a Reuters poll of 17 analysts predicted that the SBP will hold rates steady.

Three analysts forecasted a 100-basis-point (bps) cut, while one expected a 25-bps cut today. Fourteen of those surveyed expected a rate cut in the April-June quarter.

Pakistan’s key rate was last raised in June to fight persistent inflationary pressures and to meet one of the conditions set by the IMF for securing the bailout.

The country’s consumer price index for February rose 23.1% year on year, its slowest rate since June 2022, partly due to the “base effect”.

In January, the central bank raised the average inflation forecast for the fiscal year ending in June to 23%-25%, from a previous projection of 20%-22%, due to rising gas and electricity prices.

Inflation hit an all-time high of 38% in May last year, driven partly by new taxation measures imposed to comply with IMF’s demands for a rescue programme that helped the nation avert a sovereign debt default.

Finance Minister Muhammad Aurangzeb during a recent interview with Geo News said: “I do think during the course of this year, we will see the rates coming down”.