The State Bank of Pakistan (SBP) will unveil the Monetary Policy Statement for next two months on Friday. Independent Monetary Policy Committee headed by Tariq Bajwa Governor SBP will meet on 24th November 2017 at the SBP head office for detailed deliberations on the developments in key macroeconomic indicators and subsequently take a decision on key interest rate.
In the previous monetary policy, announced in September, the monetary policy committee kept the policy rate unchanged at 5.75 percent aimed at maintaining stability and support growth, while remaining cautious of the weakness on the external account front. Economists and analysts are expecting that the State Bank is most likely to maintain the status quo ahead of challenges on the external front. Pakistan's current account deficit sharply increased by 122 percent to $5.013 billion in July-October of FY18 compared to $2.259 billion in the same period of last fiscal year (FY17). In addition, growth of home remittances is slow due to downsizing of workforce in Gulf countries owing to lower oil prices.
Headline CPI inflation has been recorded at 3.8 percent on year-on-year basis in October 2017 as compared to 3.9 percent in the previous month and 4.2 percent during the corresponding month of last year. They said although inflation is in the line with the expectations, however there are some concerns over the rising current account deficit, therefore it is highly likely that the Monetary Policy Committee may keep the policy rate unchanged at 5.75 percent.
In the previous meeting of the MPC, one member voted for reducing the policy rate by 15 bps as he believed that there was still room for further reduction of the policy rate which could also indicate macroeconomic stability and strong prospects of attaining growth target, with below-target inflation. However, in conclusion, the committee decided to maintain the policy rate at its present level of 5.75 percent with a majority vote of 8 out of 9 members.