KARACHI: The State Bank of Pakistan (SBP) is expected to keep its benchmark interest rate steady at its November 25 meeting, as aggregate demand has eased and the current account deficit appears under control. , a brokerage house poll said on Thursday.
According to a survey on monetary policy expectations conducted by Topline Research, 79% of participants expect the central bank’s upcoming monetary policy to leave the policy rate unchanged.
SBP is expected to keep interest rates at 15 percent.
However, about 16% of participants expect an increase, while 5% expect a decrease in the policy rate.
“These results are also in line with our estimates where we believe that the policy rate will remain unchanged in the coming monetary policy and now it is at its peak where we could see a reduction in the policy rates in the second half of FY2023. ,” he said.
Since the last monetary policy statement on October 10, consumer price index (CPI) inflation rose to 26.6 percent in October, up from 23 percent in the previous month, but it was mainly due to an increase in electricity prices. was due to a major adjustment, which will not happen. Recurring
Additionally, the trade deficit fell to a 23-month low of $2.32 billion in October, down 40 percent from a year ago. According to data from the Pakistan Bureau of Statistics, the decline in the trade gap was due to a 26 percent drop in imports.
“This (lower trade deficit) is likely to push the CAD (current account deficit) forward and will be a key driver in SBP’s monetary policy stance,” Topline Research said.
“Furthermore, floods and fiscal and monetary tightening measures have led to a reduction in aggregate demand, which may lead the SBP to opt for stagnation, we believe.”
According to the survey, when respondents were asked about their views on the policy rate by the end of the current fiscal year, a majority believed that the policy rate would be lower by June 2023 than it was now.
Thirty-five percent of participants expect the policy rate to remain in the 14-15% range, 27% of participants expect the policy rate to remain in the 13-14% range, and 19% of participants expect It will be in the range of 12-13% by June 2023, it said.
In terms of the outlook for the current account deficit, 62% of participants expect it to remain in the range of $8-12 billion in fiscal 2023, while 21% of participants expect it to be below $8 billion.
The current account gap was projected to reach $17.4 billion in fiscal 2022 due to a sharp increase in imports.
