State Bank of Pakistan will announce on November 29 its monetary policy for the subsequent two months, Syed Wasimuddin, chief spokesman for the State Bank of Pakistan, said on Monday. "It is likely that the central bank will continue to hike the key policy rate, by at least 50 basis points, considering the fiscal indiscipline and to counter inflation" said Mohammed Sohail, chief executive at Topline Securities Ltd.
In the last monetary policy review on September 29, the central bank increased its key policy rate by 50 basis points to 13.5 percent in a bid to curb Pakistan's deepening fiscal deficit and combat rising inflation. The State Bank of Pakistan governor, Shahid Kardar, said on Monday that the government had borrowed 184 billion rupees ($2.15 billion) from the central bank since July 1. Government borrowing from the central bank can fuel inflation as it increases money supply.
"Inflation for next month could be between 17 percent and 18 percent due to a hike in sugar prices and electricity tariffs, which means the central bank could further hike the policy rate," said Khalid Iqbal Siddiqui, director at Invest and Finance Securities Ltd.
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