The State Bank of Pakistan’s (SBP) monetary policy committee, which is due to meet on January 22, is expected to keep the policy rate unchanged at 7 per cent for the third time.
SBP Governor Dr Reza Baqir will unveil the policy statement during a press conference at SBP’s main building, according to a statement released by the central bank.
According to a report by a local media outlet, multiple analysts have predicted that policy rate would remain the same after generous back-to-back reductions during last year’s lockdowns, as the risks to the outlook for both growth and inflation appear balanced.
Analysts believe the dovish stance may continue till July with inflation to stay average within the SBP’s target range of 7pc to 9pc during the current fiscal year (FY21).
Consumer price index inflation eased to 8pc in December from 8.3pc in the previous month. The SBP wants to stick to its growth projection of 1.5 to 2.5pc in FY2021, a decent recovery from the dizzying 0.4pc contraction in FY20 as a result of then coronavirus lockdown.
“The Covid-related uncertainty poses both upside and downside risks to the SBP’s macroeconomic projections,” the SBP said in the latest report.
However, the latest SBP surveys reflect well-anchored inflation expectations of both businesses and consumers.
The monetary policy committee in its meeting on Nov 23, 2020, had decided against any change in the discount rate, maintaining the rate at 7pc.
