KARACHI: New developments reported over Interest Rates changes from StateBank of Pakistan.
Amid concerns about the high policy rate and its adverse impact on theeconomy, the central bank’s current policy rate of 13.25 per cent willlikely remain unchanged in a bid to control rising inflation, predictmarket experts.
Last changed on July 16, 2019, the policy rate was hiked 100 basis pointsafter a strong cycle of monetary tightening contrasting with the globaltrend toward rate cuts.
As the new monetary policy is set to be rolled out on Monday, marketexperts predict that the policy rate would remain unaffected due to theupside risks to inflation.
However, the prediction stands in contrast to the claims made by governmentofficials, including President Dr Arif Alvi, who had hinted at a possibledecrease in the interest rate owing to a “thriving economy”.
The Pakistani economy has the seventh-highest policy rate in the world,which is well above the world average of 4.67%. In addition, Pakistan isone of the few countries that have gone toward tightening in the span of 12months. Out of 92 countries that have their own policy rate, only 6 movedtowards monetary policy hikes.
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This, however, has given Pakistan the opportunity to take advantage ofinflows for its T-bills.
Umer Farooq from AKD Securities stated in a report that an upward trend inthe prices of the commodities was bound to take place following the rupeedevaluation; however, ample supply kept these prices in check.
Keeping this in mind, headline inflation is likely to witness a jump,therefore, pushing the decrease in the policy rate later this year, headded.
