SBP likely to jack up interest rate to unlock IMF loan

ISLAMABAD: State Bank of Pakistan (SBP) is likely to raise the interest rate by 2 per cent at the upcoming meeting of the Monetary Policy Committee (MPC) to unlock the stalled IMF loan program, ARY News reported, citing sources. 

The staff-level agreement between the IMF and Pakistan was scheduled to take place on February 9.

Shehbaz Sharif-led government is taking desperate measures to get much-needed funds, but the IMF is not looking satisfied with the prior steps taken by the incumbent government.

The sources said that the IMF demanded of Pakistan to jack up the interest rate by 4pc. The fund was of the view that inflation is lower in Pakistan as per interest rate.

The SBP recently raised the interest rate by 2pc but now the IMF is ‘forcing’ Islamabad to again increase the interest rate by 2pc.

Read more: Monetary policy: SBP jacks up interest rate to 20pc

It has been learnt that the SBP’s MPC will meet on April 4 to review the interest rate and the demand of IMF. The sources further said the SBP will increase the interest rate by 2pc as was agreed with the IMF.

On March 2, the State Bank of Pakistan (SBP) raised the monetary policy rate by 300 basis points to 20per cent.

“This decision reflects deterioration in inflation outlook & its expectations amid recent external and fiscal adjustments. MPC believes this outlook warrants a strong policy response to anchor inflation expectations around the medium-term target of 5-7 percent,” the statement said.