The State Bank of Pakistan is likely to increase interest rate in the range of 25 basis points or 50 basis points during the upcoming monetary policy announcement expected on Friday 30th March, 2018.
In a survey conducted by MG Link news, the market is expecting the Central Bank to raise rates by 25 – 50 basis points in the upcoming announcement. The main cause for which has been the sudden yet much needed Rupee depreciation. The rupee took a slide by more than 4.5 percent, in one of the most abrupt fall in the value of Rupee.
Analysts, research houses, Mutual Funds managers, banks and leading brokerage houses expect the rates to go up by 25 to 50 basis points.
The State Bank of Pakistan is expected to give a statement on monetary policy this Friday for two months through a press statement, an official said.
During the survey, around 33 financial experts were asked on State Bank’s stance for the upcoming Monetary Policy decision, only three of whom were of the opinion that State Bank will keep the rate unchanged at 6 percent. However, some 27 analysts from the leading brokerage houses, mutual funds and other financial institutions were of the opinion that central bank is most likely to increase rate by 25 basis points. Meanwhile three were of the opinion that SBP might raise the rates by 50 basis points.
If State Bank of Pakistan does increase benchmark interest rate, it would do so to keep a lid on devaluation and also keeping in view the demand surge during Ramzan which is due in May, when consumers’ buying behavior pattern changes significantly.
Those who said the rate would remained unchanged were of the opinion that the risk of devaluation is quite low keeping in view the recent currency adjustment of more than 10 percent during the last four months. Since December, 2017 PKR has depreciated from Rupees 105.55 to 115.48 against the dollar.
Some Analysts were of the view that “following recent depreciation, upcoming month of Ramzan, rising imports and increasing global crude oil prices calls for an effective monetary policy and fiscal management on part of the State Bank.”
“Some changes are imminently required even as International Monetary Fund had recently said that government must consider the monetary policy with care and should not follow the path of loose monetary policy”, they said.
