MPC meeting preponed, will now be held on March 2, says SBP

The State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) is now scheduled to meet on Thursday, March 2, instead of March 16.

“The forthcoming meeting of the Monetary Policy Committee has been preponed and now it will be held on Thursday, March 02, 2023,” announced the SBP on Tuesday.

The SBP said it will issue the monetary policy statement through a press release on the same day.

The development comes after Business Recorder reported that the central bank had decided to convene an emergency meeting of the MPC during this week to deal with the emerging risks to the economy.

MPC meeting on March 2: market expects 200bps hike in key policy rate

Sources had told Business Recorder the meeting would be held earlier to review key economic indicators and take a decision on interest rate.

“Multiple and unexpected developments on the economic front have forced the SBP to call the MPC meeting coming Thursday,” they said on Monday.

Earlier, SBP chief spokesman Abid Qamar had not confirmed the exact date but said there is a possibility of an MPC meeting during this week.

Last week, Qamar had said that the next MPC meeting was so far scheduled on March 16 amid widespread speculation that the central bank was likely to announce an off-cycle review to raise the key interest rate.

Next MPC meeting so far scheduled on March 16, says SBP

In the previous meeting held on January 23, 2023, the committee increased the policy rate by 100 basis points to 17%.

Back then, it cited persistent inflationary pressure as the reason behind the hike.

The pace of inflation, however, has since increased with January’s Consumer Price Index-based reading of 27.6% clocking in at nearly a 48-year high.

With Pakistan aggressively implementing measures to convince the International Monetary Fund (IMF) to revive its much-needed bailout programme, many believe inflation is set to inch upwards as higher energy tariffs and a weaker rupee in the face of a flexible exchange rate cause further pressure.

The market is already pricing in a hike with the interest rate on short-term government papers rising to 19.95% in the auction held last week. The cash-strapped government, which announced austerity measures last week, ended up borrowing Rs258 billion at a higher cutoff yield.

An emergency meeting outside of the SBP-issued advance calendar happened last year in April in which the MPC decided to raise the policy rate by 250 basis points.

In the previous meeting held on January 23, 2023, the committee increased the policy rate by 100 basis points to 17%. This was the highest level of the key policy rate since October 1997.