The State Bank of Pakistan (SBP) is likely to keep the interest rates unchanged at 9.75 per cent when the Monetary Policy Committee (MPC) meets on Tuesday for the second time this year, research reports of two leading brokerage houses said.
The AKD Securities Limited and the Topline Securities both in their research reports predicted that the central bank is expected to maintain the status quo on policy rate at 9.75 per cent as the past monetary actions backed by the supplementary budget have helped moderate the demand-side pressures.
The Russia-Ukraine conflict has breathed a new life into the commodities’ bull-cycle which does pose risks to SBP’s inflation target (9 to 11 per cent for FY22) in the near term, it said. “However, the recently announced relief measures, if maintained, might shave off 1.5 per cent over the next four months’ expected inflation, bringing inflation well below the high range of the target.”
However, the AKD Securities maintained its policy rate forecast at 11.0 per cent for 2022. “However, the unfolding of events in Ukraine has led us to believe the hikes could be slower than previously envisaged as to keep economic growth targets undisturbed,” the report said.
The Topline Securities also predicted a status quo in the policy rates. “We believe, though commodity prices recently have risen sharply, keeping in view the SBP’s focus to sustain economic recovery and its last forward-looking guidance, we anticipate no change in upcoming MPS.”
“The decision to not increase petroleum prices till June 2022 may also provide some cushion to the inflation outlook,” it said.
