Monetary Policy Committee: SBP issues advance calendar for meetings in January-June 2023

The State Bank of Pakistan (SBP) announced on Monday the advance calendar of Monetary Policy Committee (MPC) meetings for the period between January and June 2023.

According to it, the central bank has scheduled four meetings during the six-month period. The first meeting will be held on January 23 (Monday), 2023 while the second one will be held on March 16 (Thursday), 2023.

The third meeting is scheduled to be held on April 27 (Thursday), 2023 while the fourth is expected to take place on June 12 (Monday), 2023.

SBP raises key interest rate by 100bps, takes it to 16%

What does the MPC do?

The MPC is responsible and fully empowered to decide the monetary policy stance.

Section 9E of the SBP Act 1956 lays out the powers and functions of the Monetary Policy Committee that have been mainly identified to formulate monetary policy, including, as appropriate, decisions relating to intermediate monetary objectives, key interest rates and the supply of reserves in Pakistan and may make regulations for their implementation.

Moreover, the MPC also approves and issues the monetary policy statement and other monetary policy measures. It also performs any other functions conferred on it by law and carries out any ancillary activities incidental to the exercise of its functions under this Act.

It is pertinent to mention that in the last MPC meeting held on November 25, 2022, the central bank hiked the key interest rate by 100 basis points (bps), taking it to 16%, the highest since 1998-99.

The MPC’s decision was driven by a 3.5 percentage-point increase in headline inflation in October to 26.6% percent (y/y), caused by the normalisation of fuel cost adjustments in electricity tariffs and rising prices of food items.

The central bank also revised upwards its inflation projections for FY23.

“While inflation is likely to be more persistent than previously anticipated, it is still expected to fall toward the upper range of the 5-7% medium-term target by the end of FY24, supported by prudent macroeconomic policies, orderly Rupee movement, normalizing global commodity prices and beneficial base effects,” the MPC said in its statement.