Devising monetary policy is never an easy task. This process is further complicated in developing economies such as Pakistan where empirical data from various stakeholders is largely missing and theoretical frameworks developed in the context of advanced economies do not depict ground realities with complete accuracy. The State Bank of Pakistan has remained cognisant of these shortcomings and has taken various steps to improve the effectiveness of its monetary tool kit, including the launch of its Centre for Survey Research, last week. Headed by SBP senior joint director research, Abdul Faheem, the central bank has initiated consumer confidence surveys in collaboration with the Institute of Business Administration (IBA). Speaking at the inauguration ceremony, Governor SBP Yaseen Anwar stated that "expectations regarding inflation, interest rates, stock prices and employment are important for policy formulation," adding "this explains why many developed and developing countries are using household surveys for policy research purposes." Speaking to BR Research, Chairperson Accounting and Law Department-IBA, Professor Asad Ilyas revealed that the collection of responses from respondents for the first round of this confidence survey has already been completed. Once the data collected in this round is tabulated, the results will serve as base entries against which the results of subsequently conducted surveys will be compared. The survey starts with questions aimed at gauging the respondents perception of the overall economic conditions prevalent today as well as their expectations regarding the same six months from now. Other questions posed to those interviewed assess their opinions and expectations regarding the prices and affordability of food, consumable products (such as toiletries and other household items) and durable goods (such as housing, automobile). "Respondents are asked about plans to buy a new house or to remodel an existing one," said Ilyas, explaining that responses from the sample of interviewees provide insights about peoples expectations about prices and affordability of various products. The survey also probes subjects regarding their present incomes along with their expectations regarding increases or decreases in their income over the next twelve months. "Questions regarding income, its sources, number of earning heads in the family and family size allow us to gauge household incomes against their expenditures," he said. Governor SBP Yaseen Anwar has already made it evident that the findings of these surveys will be incorporated in future decisions regarding monetary policy. However, the exact nature of this incorporation as well as the importance to be accorded to them in the decision warrants further attention. It is worth noting that successive rounds of this survey are likely to add to the credibility of the data, as marginal scores on each of the survey topics will allow researchers to identify trends in consumers perceptions.
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