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KARACHI: The meeting of the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) will be held on Monday to decide about the policy rate.

The SBP on Tuesday has issued a calendar of monetary policy committee meetings for the first half of this year. Overall, four MPC meetings will be held during Jan-June to review the monetary policy stance.

First MPC meeting is scheduled on January 29, 2024 for deliberations on the key economic indicators to take a decision on key policy rate. Governor SBP, Jameel Ahmad will announce the Monetary Policy decision at a media briefing on the same day after the MPC meeting.

The second MPC meeting will be held on 18th March, third meeting on 29th April, and the last meeting of this half has been fixed on 10th June, 2024.

In the previous meeting held on Dec 12, 2023, the Committee maintained the policy rate at 22 percent as the committee believed that a hike in gas prices may have implications for the inflation outlook. Policy rate is unchanged since June 2023, when, the MPC convened an emergency meeting and decided to raise the policy rate by 100 bps to 22 percent to keep real interest rate firmly in the positive territory on a forward-looking basis.

Although the country’s economy is gradually improving, most analysts are expecting that policy rate may remain unchanged in the upcoming meeting as the inflation is still higher than projections.

Muhammad Sohail CEO Topline said that though inflation is coming down but pace of that is slower than expectations. “Therefore, we don’t think rates will come down in Jan meeting of MPC”, he added. However, he is expecting a cut in the policy rate in the next meeting to be held in March this year. On the economic front Pakistan’s current account has improved significantly and recorded a $ 397 million surplus in December 2023 compared to a deficit of $ 365 million in Dec 2022.

The Foreign Direct Investment (FDI) in Pakistan rose by 35 percent to $ 863 million during July-Dec of FY24 compared to $ 640 million in the same period of last fiscal year (FY23).

In addition, the United Arab Emirates (UAE) has rolled over its $2 billion deposits with Pakistan for another one-year, while the International Monetary Fund (IMF) has also released $ 705 million loan tranche to Pakistan last Wednesday.

It may be mentioned here that during the last few months, the interest rate on short term government papers has fallen by more than 3 percent. While, 6-month lending benchmark Karachi Interbank Offered Rate (KIBOR) has down from a peak of nearly 25 percent in Sep 2023 to less than 20.85 percent on Tuesday.

Copyright Business Recorder, 2024

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