Poll suggests SBP to keep benchmark policy rate unchanged at 15pc State Bank of Pakistan

Poll suggests SBP to keep benchmark policy rate unchanged at 15pc

KARACHI: A poll has suggested that the State Bank of Pakistan (SBP) likely to keep benchmark policy rate at 15 in its monetary policy announcement scheduled for November 25, 2022.

Topline Research conducted a Poll from market participants to assess their view on the upcoming Monetary Policy announcement.

READ MORE: SBP keeps policy rate unchanged at 15% amid economic deceleration

As per the survey, 79 per cent of the participants expects no change in policy rate in upcoming monetary policy and is likely to remain at 15 per cent. Around 16 per cent of the participants anticipates an increase whereas 5 per cent of the participants expects a decrease in policy rate.

Responding to second question on their view about policy rate by end of the current fiscal year 2022-2023, majority think policy rate will be less than what it is now by June 2023.

About 35 per cent of the participants expects policy rate to be in the range of 14-15 per cent, 27 per cent of the participants expects policy rate to be in the range of 13-14 per cent, and 19 per cent of the participants anticipate it to be in the range of 12 per cent-13 per cent by June 2023.

READ MORE: SBP keeps benchmark rate unchanged at 15% amid rising inflation

In terms of outlook for Current Account Deficit (CAD), 62 per cent of the participants expect CAD to be in a range of US$8-12 billion in FY23, while 21 per cent of the participants expect CAD to be below US$8 billion in FY23. 16 per cent of the participants expect CAD to be over US$12 billion in FY23. To recall, CAD in FY22 had clocked in at US$17.4 billion led by sharp uptick in imports.

These results are also in line with our estimates where we think that policy rate will remain unchanged in upcoming monetary policy and are now at its peak where we can see a decline in policy rates in the second half of the current fiscal year.

READ MORE: Poll sees no policy rate change in August 22, 2022 meeting

Since last monetary policy statement on October 10, 2022, CPI inflation increased to 26.6 per cent in October 2022 as compared to 23 per cent in September 2022 but this was primarily due to major adjustment in electricity tariffs which will not be recurring.

Furthermore, October 2022 imports saw 13 per cent contraction as a result trade deficit in October 2022 was down to $2.3 billion from $2.9 billion in September 2022. This is likely to keep a check in CAD going forward and will be a key driver in SBP’s monetary policy stance.

Moreover, floods and monetary & fiscal tightening measures have led to slowdown in aggregate demand which could lead to SBP opting for status quo, we believe.

READ MORE: Pakistan hikes key policy rate by 125 basis points to 15%