Sun, 22 May 2022

Karachi [Pakistan], January 21 (ANI): State Bank of Pakistan (SBP) is likely to keep its benchmark policy rate unchanged next week though an expected rate increase could be witnessed in the coming months due to inflation.

The SBP raised the policy rate by 100 basis points to 9.75 per cent last month to counter double-digit inflation, falling rupee and the large current account deficit. It has hiked interest rates by 275 basis points since September 2021, according to News International.

Earlier, Pakistan's central bank increased the interest rate in December last year and would now likely wait and review the economic recovery position and sustainability, before taking a decision on raising borrowing costs in March.

On the other hand, the SBP's governor Dr Reza Baqir, on many occasions, said the global developments, including recoveries around the world and supply chain disruptions, have caused a sharp spike in global commodity prices, which has pushed up Pakistan's current account deficit as well as inflation, according to News International.

However, the SBP Governor is optimistic that Pakistan has the capacity to sustain the balance of payments pressures fuelled by commodity spikes.

Meanwhile, the consumer price index inflation increased to 12.28 per cent in December from a year earlier, above the SBP's upwardly revised 9-11 per cent forecast for this fiscal year.

Further, Pakistan's trade deficit surged by a sharp 106.4 per cent to USD 25.478 billion in July-December Fiscal year 2022, given a hefty increase in imports, compared with exports.

Samiullah Tariq, the research head at Pak-Kuwait Investment Company also sees no change in the upcoming policy. "If commodity prices continue to rise, then we may see a 50bps hike in March," he said.

Analysts at Topline Research expect Pakistan's country's retail inflation in the fiscal year 2022 to remain at around 11 per cent. They believe a future rise of 50-100bps till June 2022 is likely, according to News International. (ANI)

More Dominican Republic News

Access More

Sign up for Dominican Republic News

a daily newsletter full of things to discuss over drinks.and the great thing is that it's on the house!