SBP set to announce monetary policy today; rate cut expected

KARACHI: The State Bank of Pakistan (SBP) is expected to announce monetary policy today. Experts are of the opinion that the central bank will cut the policy rate by 100 basis points (bps) today.

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The Monetary Policy Committee (MPC) will meet today (Monday), to decide on monetary policy for the next two months. SBP Governor Jameel Ahmad will announce the monetary policy decision at a press conference after the MPC meeting.

As per a recent poll by Topline Securities brokerage house, 75 per cent of market participants expect a rate cut, with 60 per cent predicting a reduction of 100 basis points. This aligns with forecasts of lowering the policy rate to 19.5 per cent, driven by an expected decline in inflation to 11 per cent in July 2024.

If realised, this adjustment would mark the second consecutive rate cut following a 150 basis point decrease at the last meeting.

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On the other hand, Pakistan’s Extended Fund Facility (EFF) with the International Monetary Fund (IMF) worth approximately $7 billion was expected to bolster the central bank’s foreign exchange reserves.

However, as per the latest data released by the SBP, foreign exchange reserves fell drastically by $397 million during the week that ended on July 19.