State Bank to Announce Monetary Policy on Friday

The Monetary Policy Committee of the State Bank of Pakistan (SBP) will meet on Friday, November 25, 2022, in Karachi to decide on the Monetary Policy. The central bank will issue the Monetary Policy Statement through a press release on the same day. To recall, in last month’s monetary policy meeting, the SBP decided to keep the policy rate unchanged at 15 percent. The MPC at the time was of the view that the monetary policy stance struck an appropriate balance between managing inflation and maintaining growth against the backdrop of losses due to floods. In October, the SBP stated that the desired moderation in economic activity has become more visible and entrenched, signaling that the tightening measures implemented over the last year are gaining traction. Clearly, the MPC is not going to consider inflation trajectory alone, but also a few other developments in the economy such as the ones on the external account, which will be a key consideration in the policy decision. Overall, expectations and market sentiment indicate that the interest rate will remain unchanged this time as well. Pertinently, since the last monetary policy statement, consumer price index (CPI) inflation increased to 26.6 percent in October 2022 due to a major adjustment in electricity tariffs, which may not be recurring. Imports fell 13 percent, and the trade deficit fell to $2.3 billion in October 2022. This is likely to keep a check on the current account deficit going forward and will be a key driver in the central bank’s monetary policy stance.