Analysts and economists anticipate that the State Bank of Pakistan would maintain the main policy rate at 15% when it announces its monetary policy tomorrow.
All seven experts who talked to Dawn.com said they anticipated the central bank to keep interest rates steady, with many pointing out that the economy had started to slow down and that inflation, which had recently reached decades-high levels, will be heading downward.
The consumer price index increased 23.2 percent in September, dropping from a four-decade high of 27.3 percent in August, reversing the pattern seen in September. In October, headline inflation came in at 26.6 percent from a year earlier.
With the most recent increase of 125 bps occurring in July, the central bank has increased interest rates by 525 basis points so far this year. In spite of no inflation slowdown since then, the SBP has kept rates unchanged in two monetary policy sessions.
“Future decreases in inflation are anticipated as global commodity prices fall. The current account deficit has been substantially under control, “Ismail Iqbal Securities’ Fahad Rauf remarked.
“High-frequency indicators, such as sales of automobiles, cement, and petroleum, among others, show that demand in the economy has decreased. We therefore believe that a further ascent is not necessary at this time, “he said
The central bank may decide to maintain rates at their current levels if worldwide oil prices decline and the current account deficit improves, according to a number of analysts.
Even though Ishaq Dar, the finance minister, who took over control of the economy in September, has said he intends to lower interest rates, all of the experts surveyed think it was premature for such a move.
“The finance minister has made no secret of his preference for lower interest rates. Naturally, the State Bank is now autonomous and cannot be told what to do directly by the minister of finance. But considering that oil prices have decreased and US inflation has decreased as well, I believe that the government may feel that it has room to maintain interest rates at their current level “KTrade Securities Chairman Ali Farid Khwaja made this statement.
“The economy is beginning to show some effects of the rate increases thus far. The pace of activity has slowed. We continue to be in the region of negative real interest rates, nonetheless. The SBP may choose to maintain its wait-and-see strategy as a result “Amreen Soorani of JS Global stated.
Some others thought that the US Federal Reserve’s intention to pause rate increases, which was revealed in the meeting minutes, may have also played a role in the decision to maintain the policy rate at its current level.