AIRLINK 142.41 Decreased By ▼ -2.09 (-1.45%)
BOP 10.13 Decreased By ▼ -0.03 (-0.3%)
CNERGY 7.11 Decreased By ▼ -0.07 (-0.97%)
CPHL 81.55 Increased By ▲ 0.15 (0.18%)
FCCL 44.71 Decreased By ▼ -0.04 (-0.09%)
FFL 15.10 No Change ▼ 0.00 (0%)
FLYNG 53.33 Increased By ▲ 0.42 (0.79%)
HUBC 136.05 Increased By ▲ 1.70 (1.27%)
HUMNL 11.12 Increased By ▲ 0.09 (0.82%)
KEL 5.13 Increased By ▲ 0.08 (1.58%)
KOSM 5.54 Decreased By ▼ -0.06 (-1.07%)
MLCF 81.35 Increased By ▲ 1.85 (2.33%)
OGDC 212.25 Increased By ▲ 1.45 (0.69%)
PACE 5.53 Decreased By ▼ -0.17 (-2.98%)
PAEL 38.87 Decreased By ▼ -0.73 (-1.84%)
PIAHCLA 22.06 Increased By ▲ 0.36 (1.66%)
PIBTL 8.03 Decreased By ▼ -0.12 (-1.47%)
POWER 13.57 Increased By ▲ 0.07 (0.52%)
PPL 163.63 Increased By ▲ 1.63 (1.01%)
PRL 32.21 Increased By ▲ 0.01 (0.03%)
PTC 23.43 Decreased By ▼ -0.02 (-0.09%)
SEARL 84.58 Increased By ▲ 0.08 (0.09%)
SSGC 43.00 Decreased By ▼ -0.06 (-0.14%)
SYM 14.20 Decreased By ▼ -0.25 (-1.73%)
TELE 7.35 Decreased By ▼ -0.14 (-1.87%)
TPLP 9.27 Decreased By ▼ -0.12 (-1.28%)
TRG 56.68 Decreased By ▼ -4.92 (-7.99%)
WAVESAPP 9.06 Increased By ▲ 0.06 (0.67%)
WTL 1.45 Decreased By ▼ -0.04 (-2.68%)
YOUW 4.74 Increased By ▲ 0.29 (6.52%)
BR100 12,933 Increased By 10 (0.08%)
BR30 37,084 Increased By 110.3 (0.3%)
KSE100 120,023 Increased By 20.7 (0.02%)
KSE30 36,533 Increased By 91.5 (0.25%)

KARACHI: Central bank is widely expected to keep its key interest rate unchanged at 21% on Monday after aggressive rate hikes since April last year to tackle record high inflation amid the nation’s worst-ever economic crisis.

The country’s key rate has been raised by a massive 1125 basis points (bps) since April 2022 and 17 of 18 analysts surveyed said there would be no change in the key rate on Monday, while one expects a 100 bps hike.

“They’ll point to a ‘plateauing of inflation’ as evidence that rates don’t need to go up,” said Uzair Younus, Director of the Pakistan Initiative at the Atlantic Council’s South Asia Center.

MPC to meet on 12th

Most analysts agreed that with inflation peaking and global commodity prices coming down, there was no urgent need to hike interest rates yet again.

Inflation surged to 37.97% in May, a record high for a second month in a row, and the highest in South Asia, ahead of Sri Lanka, which posted annual inflation of 25.2% in May.

“The inflation readings are expected to fall due to high base effect,” said Fahad Rauf, head of research at Ismail Iqbal Securities.

“We expect 30% inflation for June 2023 vs 38% in May. GDP growth was meager 0.3%, which would probably be revised to negative once the final/revised GDP numbers are released next year,” he added.

But Shivaan Tandon, economist at Capital Economics, expects a 100 bps hike, saying the central bank cannot afford the luxury of keeping the policy rate on hold given the need to tame record high inflation and support the currency through monetary tightening.

“Rate hikes may also prove to be a signal to potential creditors about the authorities’ commitment towards resolving external imbalances,” he said.

The policy decision will follow the annual budget that will be presented to parliament on Friday. The government will hope to strike a balance between reforms to satisfy the International Monetary Fund (IMF) and measures to win over voters in an imminent election due by November.

The cash-strapped country, with reserves to barely meet a month’s worth of imports, is undertaking steps to secure a $1.1 billion loan, part of a $6.5 billion IMF bailout package.

These measures include raising taxes and removing blanket subsidies and artificial curbs on the exchange rate.

Comments

Comments are closed.