KARACHI: The State Bank of Pakistan (SBP) will issue the Monetary Policy Statement on March 8, 2022.

The Monetary Policy Committee of SBP is scheduled to meet on Tuesday, March 8, 2022 at SBP Karachi to decide about the Monetary Policy.

According to analysts, the upcoming monetary policy meeting will be important for the MPS decision as the country is currently facing several economic challenges like higher inflationary pressure and current account deficit.

In its last monetary policy statement issued on Jan 24, 2022, the monetary policy committee maintained the key policy rate unchanged at 9.75 percent.

In its last MPS statement, the MPC was of the view that current real interest rates on a forward-looking basis are appropriate to guide inflation to the medium-term range of 5-7 percent, support growth, and maintain external stability. “If future data outturns require a fine-tuning of monetary policy settings, the MPC expected that any change would be relatively modest,” the SBP added.

Since the last MPS, major developments have taken place and fresh economic data will be considered by the monetary policy committee in the next meeting to be held on Tuesday.

As per SBP’s projections, the current account is expected to decline during the second half of FY22, as import growth slows in response to a normalization of global commodity prices and the fuller impact of demand-moderating measures.

However, as against the SBP expectations, the current account deficit in January 2022 is still above $2.5 billion. Cumulatively, the current account deficit rose to $11.58 billion deficit in the first seven months of this fiscal year (FY22) as against a $1 billion surplus in the same period of last fiscal year (FY21).

On other hand, inflation clocked in at around 12.2 percent in Feb 2022 versus 13.0 percent in Jan 2022 and 12.3 percent in Dec 2021. In addition, due to the Russia-Ukraine crisis, commodity prices have witnessed a sharp increase which has consequences on inflation and current account outlook. International oil prices also continued to surge.

According to Topline analysts, though commodity prices recently have risen sharply but keeping in view SBP’s focus to sustain economic recovery and its last forward-looking guidance, no change is being anticipated in upcoming MPS.

Copyright Business Recorder, 2022