KARACHI – State Bank of Pakistan is likely to increase interest rates further to 24 percent in its upcoming policy review meeting this month.
Inflation in Pakistan continues to soar from mid 2022, and SBP is expected to increase policy rate by up to 150 basis points. As the key policy rate already stands at a record high of 22pc, Brokerage houses predicted that Pakistan’s central bank will increase the key policy rate in an instant move to curb runaway inflation.
In its fresh report, Arif Habib Limited said the State Bank will increase the key policy rate by 150bps to 23.5pc. The brokerage house termed the expected hike as a precautionary measure to address the persistently high levels of inflation.
It further maintained that the grim trend of increasing inflation is likely to stay here, with forecasts indicating an average inflation rate of 28.5pc until December 2023, particularly following an expected peak in September 2023.
As some predicted it to be clocked at 23.5pc, several sources familiar with development claimed that SBP is strongly expected to raise the policy rate by at least 200 basis points to 24 percent after the regulator’s latest auction of Treasury Bills as the government raises Rs1.3 trillion domestic debt at extortionate rates of up to 25.06 percent.
Inflation remained high for around 1.5 years, rising to a record high of 37.97 percent in May this year. In recent months, the inflation plunged to 30 percent.
