State Bank’s MPC to meet tomorrow; increase in policy rate expected


Karachi: The State Bank of Pakistan (SBP) has preponed its Monetary Policy Committee (MPC) meeting and it will now be held on March 2 — initially scheduled for March 16 — to decide the key policy rate for the next month and a half.

Sources revealed that Governor SBP Mr Jameel Ahmad would announce the monetary policy decision at a press conference after the MPC meeting.

The MPC is expected to raise interest rates by at least 200 basis points as the cash-strapped government struggles to secure a bailout from the International Monetary Fund (IMF) to boost its beleaguered economy.

It is pertinent to mention that the global lender and the central bank had held a round of discussions about the possibility of further tightening the monetary policy and building up foreign exchange reserves by the end of June 2023.

The IMF had also asked the SBP for hiking the policy rate by 300 to 400 basis points to move towards the interest rate from a negative to a positive trajectory.

The cash-strapped country is undertaking key measures to secure IMF funding, including raising taxes, removing blanket subsidies, and artificial curbs on the exchange rate. While the government expects a deal with IMF soon, media reports say that the agency expects the policy rate to be increased.