KARACHI: When the State Bank of Pakistan (SBP) releases its monetary policy statement (MPS) today, it is anticipated to keep the benchmark interest rate at 15%. (Monday).Despite the fact that inflation has remained high, the central bank is very likely to keep the interest rate at 15%, which it increased by 125 basis points at its most recent meeting in July, the highest level since November 2008.
In accordance with the coalition government’s policies, the status quo will so continue to encourage economic recovery.Market participants and financial experts have come to an understanding that the central bank will keep the rate at 15% for the ensuing seven weeks.Since September 2021, the central bank has raised the rate by a total of 800 basis points in an effort to curb inflation and reduce the current account deficit.
Commercial banks anticipate that the SBP’s monetary policy committee (MPC) will raise the rate, likely by 100 basis points, given that the benchmark consumer price index inflation spiked to a 14-year high at about 25% in July and that weekly inflation reached a record high of over 42% in the week ended on August 18.
As energy costs in the nation continue to rise, it is expected that inflation will also rise. To combat this, central banks around the world have two main instruments at their disposal: interest rates and flexible rupee-dollar parities.
