Pakistan’s central bank may keep rate at 11.5% despite accelerating inflation — Dawn
The State Bank of Pakistan is set to decide on its key rate at the upcoming Monetary Policy Committee meeting amid accelerating inflation and rising global energy prices. The rate currently stands at 11.5%, and bankers mostly expect the regulator to leave it unchanged, Dawn reports.
At the same time, some analysts suggest a 50-basis-point rate increase. Business and industrial circles consider the current rate level high compared with competing markets.
Inflation has returned to double digits
Inflation in Pakistan reached 11.1% in August after falling to 9.2% in July. On April 27, the State Bank raised its key rate by 100 basis points, to 11.5%, due to rising global energy prices and risks to supply chains.
According to analysts, the regulator has found itself between the need to contain inflationary pressure and risks to the economy. According to a senior banker, the bank must take long-term prospects into account and may resort to a slight rate increase.
More current news is available on the UA.News Telegram channel Telegram.
Pressure from global markets
The war in the Persian Gulf, which has spread to the Red Sea, has been accompanied by fuel prices rising above $100. As Dawn writes, persistent attacks have complicated the passage of oil tankers along this route. The price of Brent crude exceeded $105 per barrel.
Tresmark CEO Faisal Mamsa said that Pakistan’s rate outlook is increasingly dependent not only on domestic inflation but also on the global situation. He pointed to the European Central Bank’s 25-basis-point rate increase, rising global bond yields, and US inflation at around 3.4%.
A Tresmark survey showed that 20% of institutional traders expect a 50-basis-point rate increase. At the same time, Bloomberg Economics and BMI forecast that the rate will remain unchanged, although pressure for a future increase may intensify.
