Potential tax measures and PKR devaluation to push up interest rates: Saad Hashmi, Topline

January 7, 2019 (MLN): In its report published on Friday January 4, 2019, Fitch Solutions, a unit of Fitch Group shared its expectation that the State Bank of Pakistan (SBP) will maintain the interest rate at 10% for the current financial year 2019, given the aggressive hikes in the recent past.

Moreover, with price pressures likely to remain stable over the coming months due to the decline in oil prices and the pre-emptive hikes, which will help offset the second round effects of PKR depreciation, Fitch Solutions believes that the SBP is now ahead of the curve and will remain on hold for the remainder of the FY19.

In response to the article, Mr. Saad Hashmi, Economy Expert at Topline Securities panned out a contradictory view, telling Mettis Link News that analysts at Topline expect SBP to raise the policy rate by another 100 basis points, given potential hike in inflation in upcoming months.

While Fitch Solutions estimated inflation to log in at 6% in FY2018/19, Mr. Saad Hashmi’s average inflation forecast is higher, accounting for the 25% rupee devaluation in 2018, the complete impact of which is still to reflect on inflation.

Another reason for higher inflation forecast is expected taxation measures that the government will take in the near future.

Copyright Mettis Link News

Posted on: 2019-01-07T14:51:00+05:00

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