KARACHI: The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) will meet on Monday (Jan 24) to decide about the key policy rate. The MPC will review the key economic indicators including inflation, external and fiscal sectors, economic growth and results of monetary policy stance, to take a decision on interest rate.
This will be consecutively third Monetary Policy meeting during the three months as the SBP, in November 2021, decided to increase the number of the MPC meetings from six to eight times a year amid greater volatility in economic indicators.
Last MPC meeting was held on December 14, 2021, in which the committee raised the policy rate by 100 basis points (bps) to 9.75 percent to counter inflationary pressures and ensure that growth remains sustainable.
The committee had already increased the policy rate by 2.75 percent in the last four months due to rising current account deficit and inflationary pressures. Most of analysts are expecting that key policy rate will remain unchanged at 9.75 percent in the upcoming monetary policy meeting to be held on January 24, 2022. Governor State Bank of Pakistan, Dr. Reza Baqir, will announce the monetary policy in a press conference on the same day after the MPC meeting.
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The SBP, in the previous monetary policy statement, has already hinted that monetary policy settings to remain broadly unchanged in the near-term. In addition, with 100 bps increase in policy rate in December 2021, the MPC also felt that the end goal of mildly positive real interest rates on a forward-looking basis was close to being achieved.
According to Topline Research poll of key financial market participants on expectations over monetary policy, around 60 percent of the participants believed that there will be no change in policy rate in upcoming Monetary Policy Statement (MPS) whereas the remaining participants expect an increase. Some 18 percent participants expect rise of 25 bps whereas 22 percent of the participants anticipates a rise of 50 bps or more.
Most of the market participants were of the opinion that they may not see a hike in upcoming MPS however hike in the remainder of FY22 is highly likely.
Copyright Business Recorder, 2022
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