KARACHI – The State Bank of Pakistan’s (SBP) Monetary Policy Committee has decided to raise the policy rate by 100 basis points to 11.50 percent.
The decision to increase the interest rate for next one and half months was taken in the MPC meeting chaired by the SBP Governor Jameel Ahmed.
Earlier, a recent survey conducted by Topline Securities revealed that most of the experts have anticipated a hike in the interest rate due to Middle East tensions that have driven the global oil prices and sparked inflation fears.
A recent survey revealed that 53% of respondents anticipated a policy rate hike in the upcoming review. Of those expecting an increase, 41.2% predict a rise of 50 to 100 basis points, 10% expect a smaller adjustment of 25 to 50 basis points, and around 2% foresee a larger hike exceeding 100 basis points. Meanwhile, 47% of participants do not foresee any tightening in monetary policy.
Financial analysts at Topline Securities project that the central bank may raise the policy rate by 50 basis points. They argued that stricter monetary measures could help counter inflationary pressures from rising energy costs and discourage non-essential imports.
A day earlier, FPCCI President Atif Ikram Sheikh had called on SBP to refrain from raising interest rates. He described the recent rise in inflation as temporary, linked to the regional situation.
Sheikh stressed that lowering interest rates is crucial to encourage investment and create more job opportunities.
Highlighting the risks of high borrowing costs, Sheikh warned that elevated interest rates could slow industrial and commercial activity, negatively affecting overall economic growth.
He urged authorities to adopt a cautious monetary policy in light of the unpredictable regional environment.
