The State Bank of Pakistan (SBP) on Tuesday decided to prepone the Monetary Policy Committee’s (MPC) meeting from the previously announced date of November 26 .
According to a statement issued in this regard, the central bank said that the committee will now convene at SBP Karachi on Friday, November 19.
According to the statement, the meeting has been moved forward in light of “recent unforeseen developments that have affected the outlook for inflation and the balance of payments.”
It added that the meeting will be convened earlier in order to help reduce the uncertainty about monetary settings prevailing in the market.
The Monetary Policy Committee has decided to bring forward its upcoming meeting to Nov 19th, from the previously announced date of Nov 26th, in order to help reduce uncertainty about monetary settings prevailing in the market.https://t.co/nn8ftmNJhZ
— SBP (@StateBank_Pak) November 16, 2021
“The MPC will take stock of these developments and decide about monetary policy. The SBP will issue the Monetary Policy Statement through a press release on the same day.”
Earlier in September, SBP had increased the benchmark interest rate by 25 basis points to 7.25 per cent for two months, after keeping the policy rate unchanged six times in a row, making it the first such increase since June 2020.
A statement issued in this connected had said that since its last meeting in July, the MPC noted that the pace of the economic recovery has exceeded expectations.
“This robust recovery in domestic demand, coupled with higher international commodity prices, is leading to a strong pick-up in imports and a rise in the current account deficit. While year-on-year inflation has declined since June, rising demand pressures together with higher imported inflation could begin to manifest in inflation readings later in the fiscal year,” said the statement.
Looking ahead, in the absence of unforeseen circumstances, the MPC expects monetary policy to remain accommodating in the near term, with possible further gradual tapering of stimulus to achieve mildly positive real interest rates over time. In reaching its decision, the MPC considered key trends and prospects in the real, external and fiscal sectors, and the resulting outlook for monetary conditions and inflation, said the statement.
The interest rate rise caught analysts off guard, many of whom were expecting the central bank to leave the rate unchanged. In its previous policy review on July 27, the central bank had kept the policy rate unchanged at 7pc for the sixth time in a row during a 13-month period.
The interest rate is a tool available with the central bank to control inflation, regulate unnecessary rupee movement and give direction to the national economy.
Analysts believe that the central bank will announce an increase of 25-50 basis points in the upcoming meeting.
