State Bank of Pakistan expected not to cut rate until June
Citi Bank predicts that the State Bank of Pakistan will
postpone a rate cut until June, maintaining the current monetary policy rate of
22 percent. This decision aims to gain more clarity on how the fiscal year
2024-2025 budget might impact inflation.
The bank noted that the more hawkish tone in the March Monetary Policy Committee (MPC) meeting was driven by the need to assess the impact of administered price adjustments and inflationary implications from the upcoming budget.
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Bank of Pakistan (SBP) anticipated to maintain the current key policy rate
Despite expectations of a downward trajectory in consumer prices due to tight monetary policy and improving agricultural supply, the SBP adopted a cautious stance in March to assess the impact of price adjustments, citing pressure from rising oil prices due to tension in the Middle East.
Pakistan is expected to opt for one of its largest loan programs with the International Monetary Fund (IMF) soon, and the central bank will need to remain cautious as the government negotiates the terms of a new program with the IMF.
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Bank of Pakistan keeps policy interest rate steady at 22%
Additionally, the current account deficit is expected to be 1.5 percent of GDP in FY25, aligning with the expected GDP growth of 2-3 percent.
Source: The News