SBP to hold policy rate at 22%: Economists’ Estimates

March 18, 2024 (MLN): The State Bank of Pakistan (SBP) is expected to hold the policy rate unchanged at 22% for sixth consecutive meeting today as the country will likely seek to negotiate a new International Monetary Fund (IMF) program soon.

The IMF has consistently advised maintaining a tight monetary policy stance.

The median estimate of the 10 economists predicts that the SBP will keep rates steady at a record high as inflationary risks persist.

SBP will remain cautious and adopt a 'watch and see' approach until the inflation trend maintain its fall, said Topline Securities Limited.

However, one analyst expects a rate cut."We believe that a data-driven approach will be pivotal in shaping the SBP's decision-making process," said Arif Habib Limited, which expects the central bank to slash rates by 100bps.

It is worth noting that the Consumer Price Index (CPI) for February slowed to a 20-month low of 23.1% YoY.

To recall, in the last scheduled meeting of January 2024, SBP maintained the policy rate unchanged at 22% citing that the frequent and sizeable adjustments in administered energy prices have slowed down the pace of decline in inflation anticipated earlier, besides impeding a sustained decrease in inflation expectations.

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