The State Bank of Pakistan (SBP) will announce the Monetary Policy Statement on Friday (November 30th) for next two months. In the previous policy announced on September 29, 2018, reviewing the economic and evolving macroeconomic situation, the independent Monetary Policy Committee was of the view that further consolidation efforts are required to ensure macroeconomic stability, therefore, the committee increased the SBP target policy rate by 100 bps to 8.5 percent effective October 1, 2018.
Analysts are expecting further monetary tightening, mainly due to a rising trend in the headline and core inflation, higher trade and current account deficit and depleting foreign exchange reserves. They anticipate that this move would result in possible hike in policy rate.
Although, recently Saudi Arabia has placed one billion dollars with Pakistan for one year to build the depleting foreign reserves, however, still SBP''s foreign exchange reserves are not at a comfortable level. The central bank''s reserves stood at $8.4 billion at the end of last week.
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