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KARACHI: The State Bank of Pakistan will convene the monetary policy committee meeting on April 29, 2024 to decide about the key policy rate.

In the previous meeting, held on March 18, 2024, the MPC decided to keep the policy rate unchanged at 22 percent as the committee observed that despite the sharp deceleration in inflation in February, the level of inflation remains high and its outlook is susceptible to risks amidst elevated inflation expectations.

Analysts and economists have mixed trend for yield cutoffs in the upcoming monetary policy. According to a survey conducted by Topline, 51 percent of participants expect the policy rate to remain unchanged, while the remaining 49 percent anticipate a policy rate cut. No participants expect an increase in interest rates.

Monetary Policy Committee to meet on Monday: SBP

Analysts said that since the last MPC meeting on Mar 18, 2024 new developments have taken place which will likely be considered by the central bank committee in upcoming meeting.

These includes a fall in CPI inflation from 23.1 percent in Feb-2024 to 20.7 percent in Mar-2024, SBP FX Reserves at $ 8bn despite repayment of $1bn Eurobond, Pakistan posted a Current Account Surplus of $ 128 million in Feb-2024 compared to a deficit of $ 303 million in Jan-2024, 2.5 percent increase in international oil prices and average 3 percent increase in local fuel prices, the rupee largely remaining stable against the US dollar and escalation in tension between Iran and Israel.

Furthermore, in the recent T-Bill auction held on April 17, we saw mixed participation in 3-month and 12-month bonds, where the cut-off yield remained unchanged at 21.66 percent and 20.89 percent respectively.

Analysts at Topline believed that the SBP will maintain cautious approach despite the above encouraging trends and adopt a “watch and see” approach until the inflation trend maintain its fall. Key risks to the inflation trajectory include increase in international prices, delay in release of IMF funds, IMF demanding additional tax measures to meet revenue target in case of any shortfall, and pressure on the dollar against rupee mainly due delay in getting dollar inflows, they added.

Copyright Business Recorder, 2024

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