Karachi, March 15, 2024 – The State Bank of Pakistan (SBP) announced on Friday that it will unveil its monetary policy on Monday, March 18, 2024.
The SBP revealed that the Monetary Policy Committee (MPC) will convene on March 18 to deliberate on the monetary policy. Subsequently, the SBP will issue the Monetary Policy Statement through a press release on the same day.
Analysts at Arif Habib Limited have provided insights into the potential outcomes of the upcoming Monetary Policy Statement (MPS), suggesting a 100 basis points cut in the benchmark policy rate. This adjustment would lower the rate to 21 percent from its current level of 22 percent.
In a recent report, analysts highlighted the likelihood of an interest rate reversal cycle, with particular attention to the anticipated rate cut during the March 2024 policy meeting of the SBP.
While opinions in the market diverge, some anticipate the MPC to maintain the status quo. This perspective stems from Pakistan’s ongoing negotiations for a new International Monetary Fund (IMF) program, with the IMF consistently advising the maintenance of a tight monetary policy stance.
Contrarily, analysts at Arif Habib Limited suggest that a data-driven approach will be pivotal in the SBP’s decision-making process. They anticipate consideration of the downward trajectory of both headline and core inflation, expected to average approximately 17% and 15%, respectively, on a 12-month forward basis. Such figures would result in significantly positive real interest rates on a forward-looking basis, aligning with the SBP’s previous MPS.
During the last scheduled meeting in January 2024, the SBP opted to maintain the policy rate at 22%, citing challenges posed by frequent and substantial changes in regulated energy prices, which hindered the expected decline in inflation. The MPC’s assessment indicated that the real interest rate remains notably positive on a 12-month forward-looking basis, with expectations for continued downward inflation trends.
As the SBP prepares to announce its monetary policy for March, stakeholders across the financial landscape eagerly await the decision. The outcome will have implications for various sectors of the economy, influencing borrowing costs, investment decisions, and overall economic activity. With expectations and speculations circulating, all eyes are set on March 18 to witness the unveiling of Pakistan’s monetary policy direction.
