State Bank to announce Monetary Policy on Sept. 16

ISLAMABAD: The State Bank of Pakistan (SBP) will announce its Monetary Policy to set interest rate for next two months on September 16 (Monday).

“The monetary policy committee (MPC) of the central bank will meet on Monday at SBP Karachi to decide about Monetary Policy and it will issue the Monetary Policy Statement through a press release on the same day,” a statement earlier said.

The experts are expecting the interest rate likely to be fixed slightly downward with most of them predicting that the central bank will opt to reduce the rate by 25 basis points.

Pakistan Bureau of Statistics (PBS) has rebased its Consumer Price Index (CPI). The change in the base year reduced CPI by 1.13 percent YoY in Aug’19. The change in base year of the CPI by the PBS expected to set the inflation rate at 9.6 percent.

In the previous meeting on 16th July 2019, the Monetary Policy Committee raised the policy rate by 100 basis points (bps) to 13.25 percent on higher inflation outlook.

Governor State Bank of Pakistan Dr Reza Baqir while announcing the monetary policy in July announced 100 basis points hike in the interest rate, which reached to 13.25 percent.

He said ,the decision made due to increasing inflationary trend and devaluation of the rupee.

The governor said that the inflation forecast has been revised up to 11-12 percent for the current fiscal year, however, it is expected to improve in the next fiscal year 2020-21.

He said that the central bank would consider downward revision of the the interest rate if inflation eases and demand further softens.

The central bank chief said that “The interest rate hike will help control dollarisation of the economy. People will prefer to keep savings in rupee rather than in the foreign currency.”

He said the interest rate hike will benefit those who have made savings in saving accounts at banks or in national saving schemes.

The SBP increased the key interest rate by 7.5% since May 2018 to 13.25%.