ISLAMABAD – State Bank of Pakistan to announce policy discount rates onMonday.
The monetary policy is to be announced on Monday. The policy may not havedirect 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 pressurefrom the business community on the heightened cost of borrowing; thiswhilst falling inflationary expectations and improved current accountbalance, chances of rate hike are thin, Business Recorder has revealed.
Status quo seems to be the plausible option. The inflation expectations ofIMF were 13-13.5 percent while SBP spelled out 11-12 percent in lastcommunication. With falling commodity prices and depressed global demandoutlook, the SBP may revise down its inflation expectations to 10-11percent.
According to sources, a soft commitment with the IMF is to keep realinterest 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.
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Had the expectations not softened, another rise could have been the case.There are reasons for decline in the second quarter as core inflation islower than headline, and the CPI may taper off in second half.
