The State Bank of Pakistan (SBP) will release Monetary Policy Statement (MPS) during last week of September, for next two months. Sources said that the central bank's board is going to meet on September 16, 2010 at SBP head office Karachi to review the monetary policy for the next two months.
Sources said that the Central Bank Board of Directors is going to meet on September 29 at SBP Head Office Karachi to review the monetary policy for the next two months. Sources said firstly, Monetary Policy Committee (MPC) constituted by SBP will finalise its recommendations and suggestions on the MPC and later the Central Bank Board of Directors would take final decision on the key policy rate.
Economists are expecting that the central bank would continue its tight monetary policy stances and key policy rate will remain unchanged at 13 percent, as inflation is once again rising on domestic front mainly due to increase in oil and commodities prices. On the other side, government budgetary borrowing is also constantly increasing due to high fiscal deficit and rising current expenditure.
"The upward trend in inflation would compel the central bank not to cut its key policy rate, therefore it is likely that SBP would maintain interest rate at 13 percent for next two months," economists said. Meanwhile, there are some expectations that SBP may increase policy rate by 50 basis points to 13.5 percent.
It may be mentioned here that the State Bank had increased its key policy rate by 50 basis points (bps) to 13 percent in July 2010 and before that in November 2009 SBP cut policy by 50 basis points to 12.5 percent aimed tat supporting the recovery of real economic activities. However in January 2010, March 2010 and May 2010, the central bank maintained it at 12.5 percent due to high inflation.
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