MPS Preview: Status Quo

October 10, 2022 (MLN): The State Bank of Pakistan (SBP) will announce monetary policy today wherein the market expects the central bank to maintain status quo.

Since the last MPC meeting country have experienced some positive developments, such as decline in current account deficit by 19% year-on-year to $1.9 billion during 2MFY23, decrease in international commodity prices, and on the domestic front, most of the high frequency indicators showed moderation to decline in growth on YoY basis. Meanwhile, inflation rate in the country decreased by 1.15% MoM in September mainly due to a reduction in electricity costs.

Furthermore, the rupee also appreciated by 7.52% to Rs18 against the greenback.

However, core inflation continued its upward trend, reaching 14%/18% for Urban and Rural areas showing an increase 90bps/140bps respectively. The rising pressures from second round impacts and consistent higher WPI would sustain until the respective take a breather.

Core inflation is currently at its highest level since 2009.

Following shows the market's expectation from today's policy rate announcement: 

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