The State Bank of Pakistan (SBP) announced on Thursday that its upcoming monetary policy committee (MPC) meeting is currently scheduled for March 16th. This statement comes amidst speculation that the central bank may conduct an off-cycle review to increase the key interest rate.
According to SBP chief spokesperson Abid Qamar, no MPC meeting has taken place since the last meeting held in January. At that meeting, the key policy rate was raised by 100 basis points to 17%, which was the highest level since October 1997. This decision was made in response to persistent inflationary pressures.
However, inflation has continued to rise since the January meeting, with the Consumer Price Index-based reading in January reaching a nearly 48-year high of 27.6%. With Pakistan implementing measures to secure an IMF bailout, some experts predict that inflation will continue to rise due to higher energy tariffs and a weaker rupee.
The market is already anticipating an interest rate hike, with the interest rate on short-term government papers rising to 19.95% in Wednesday’s auction. The cash-strapped government also borrowed Rs 258 billion at a higher cutoff yield, despite announcing austerity measures on Wednesday.
The KSE-100 Index fell 0.8% on Thursday as investors factored in the possibility of an interest rate hike. Last year, an emergency meeting was held in April outside of the SBP-issued advance calendar, where the MPC decided to raise the policy rate by 250 basis points.
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