ISLAMABAD - State Bank of Pakistan to announce policy discount rates on Monday.
The monetary policy is to be announced on Monday. The policy may not have direct bearing with the IMF team’s visit, but seeing the fiscal outages, rate cut is not on the cards. At the same time, there is immense pressure from the business community on the heightened cost of borrowing; this whilst falling inflationary expectations and improved current account balance, chances of rate hike are thin, Business Recorder has revealed.
Status quo seems to be the plausible option. The inflation expectations of IMF were 13-13.5 percent while SBP spelled out 11-12 percent in last communication. With falling commodity prices and depressed global demand outlook, the SBP may revise down its inflation expectations to 10-11 percent.
According to sources, a soft commitment with the IMF is to keep real interest rates well in positive – some say, at 300 bps. If that is true, even with inflation forecast of 10-11 percent, easing is not on the cards.
Had the expectations not softened, another rise could have been the case. There are reasons for decline in the second quarter as core inflation is lower than headline, and the CPI may taper off in second half.