The State Bank of Pakistan (SBP) will release Monetary Policy Statement (MPS) on Friday for the next two months amid expectations of a rate cut. Market is expecting only a modest 50 basis points (bps) cut in the key policy rate as inflation is easing and the government borrowing is on decline.
The Board of Directors of State Bank will meet on December 14, 2012 at SBP head office to review the monetary policy stance and take decision on interest rate. In the last monetary policy announced in October 2012, the State Bank had reduced policy rate by 50 basis points from 10.50 percent to 10 percent. Economists and analysts believe that the SBP will cut interest rate because of massive decline in inflation and government borrowings.
November inflation stood at 6.93 percent, which raised expectations of rate cut in the upcoming monetary policy, analysts said. "With decline in inflation numbers, the market is expecting a cut of 50 basis points in next policy," they added. However, they said, decline in the country's foreign exchange reserves is a matter of concern and the SBP is required to take some steps to maintain it at a suitable level.
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