The State Bank of Pakistan (SBP) will publish its key policy rate for six weeks. However, most economists predict that the rate will remain steady at 15% while the central bank awaits the stabilization of the economy.
A few economists did not rule out a 50-100 basis point increase or a 25-50 basis point decrease.
Finance Minister Ishaq Dar, adhering to his old recipe for managing a controlled economy, would prefer a loose monetary policy. The policy rate is a mechanism used by the central bank to manage inflation and economic growth.
In 11 months (September 2021 to July 2022), the central bank raised the rate to 15% by 800 basis points.
Because the Ministry of Finance has not suggested anything in the recent T-bill auctions, most analysts do not anticipate a rate hike.
The OMO injection is over Rs6 trillion and is increasing. And the SBP has just issued OMOs at market prices. This suggests that the SBP may not be considering a rate increase. The yields on the secondary market imply the same.
In addition, since the last meeting of the MPC, the international prices of major commodities such as WTI, coal, brent, steel, wheat, and Arab Light have decreased. This bodes well for our external account position, providing trade numbers with much-needed relief.
Remember that in the previous monetary policy statement, the MPC emphasized that the current rate prudently reflected a balance between supporting growth after the floods and controlling inflation.
In addition, as stated in the previous statement, the SBP closely monitors the inflation trajectory. On the inflationary front, the headline inflation rate has been in double digits since November 2021, mostly due to increased food and energy prices.
In October, headline inflation was at 26.6% year-over-year. However, month-to-month inflation increased by 4.71 percent, primarily due to fuel cost adjustments and food price increases.
After today’s meeting, the central bank will also likely release the MPC meeting schedule for the first half of 2023.
 will publish its key policy rate for the next six weeks. However, most economists predict that the rate will remain steady at 15% while the central bank awaits the stabilization of the economy.){kind=link}