The State Bank of Pakistan (SBP) is set to unveil its monetary policy for the upcoming two months on Tuesday, January 28, 2020, as confirmed by a statement released on Tuesday.
The Monetary Policy Committee (MPC) of the SBP will convene on this date at the SBP headquarters in Karachi to deliberate on the monetary policy stance.
Dr. Reza Baqir, Governor of the SBP, will communicate the MPC’s decision during a press conference scheduled for the same day. The upcoming policy announcement follows the last MPC meeting on November 22, 2019, where the committee chose to maintain the key policy rate at 13.25 percent.
During the November meeting, the MPC’s decision to hold the policy rate steady was influenced by the assessment that the recent economic developments had mixed implications for the inflation outlook. While inflation rates had surged, driven primarily by higher food prices, these were deemed to be temporary spikes.
Moreover, there has been a gradual improvement in market sentiment, supported by sustained enhancements in the current account and ongoing fiscal prudence. These factors played a significant role in the MPC’s decision to keep the policy rate unchanged.
The SBP highlighted that its inflation projection for the fiscal year 2020 remained steady at 11-12 percent. The committee considered this projection to align with the current monetary policy stance, reflecting a balance between curbing inflation and supporting economic stability.
Key factors influencing the MPC’s decision included developments in the real, external, and fiscal sectors, and their subsequent impact on monetary conditions and inflation forecasts. The committee’s approach underscores a cautious optimism, balancing short-term price shocks with longer-term economic indicators.
As the January 28 meeting approaches, stakeholders across the financial sector will keenly await the SBP’s decision, which is anticipated to provide crucial insights into the central bank’s strategy for managing inflation and supporting economic growth amid fluctuating economic conditions. The outcome of the meeting will be pivotal in guiding market expectations and policy directions in the near term.
The press conference by Governor Reza Baqir is expected to elucidate the rationale behind the MPC’s decision, providing a comprehensive overview of the economic landscape and the central bank’s policy priorities moving forward.