The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) will meet on Monday, January 23, 2023 to decide about the policy rate, the central bank said on Friday.
Governor SBP Jameel Ahmad will announce the monetary policy decision at a press conference on the same day after the MPC meeting, the central bank added.
SBP may hike rates by another 100bps to tame inflation
In its last policy meeting in November last year, the central bank pushed the rate by 100 basis points to 16%. It has raised rates by a total of 625 bps since January 2022.
“We expect a policy rate hike of 100bps to 17.0%,” said Optimus Research in its report.
“We base our rational on continued inflationary pressure which will further increase on the back of rupee devaluation and proposed gas price hike.
“Furthermore, this can also be a prior condition of the International Monetary Fund (IMF), if the authorities are planning to resume the programme. In global perspective, the economies will continue to hike interest rates, mainly following the path of FED and stronger dollar,” it said.
Policymakers are facing turmoil in Pakistan amid sharp fall in reserves that, at $4.6 billion, are not enough to cover even one month of imports. The disbursement of IMF funds has been delayed on account of Pakistan’s struggle to implement some key prior conditions.
Economic experts and markets have expressed concern over the government’s inability – and inaction – to resume the IMF’s ninth review, as it remains indecisive over fulfilling the lender's pre-requisites, such as additional revenue commitments, an increase in PDL and GST on petroleum products, and a hike in electricity and gas tariff.
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