No change likely in policy rate

The State Bank of Pakistan will unveil Monetary Policy Statement (MPS) today (Friday), with expectations of no change in key policy rate owing to persistent inflationary pressure on the economy.
The central bank’s board of directors will meet at the SBP head office prior to the policy announcement and review the monetary policy for the next two months.
Sources said firstly, Monetary Policy Committee (MPC) constituted by the SBP will finalise its recommendations and suggestions and later the central bank board would take a final decision on the key policy rate.
Economists are expecting that the central bank would continue its tight monetary policy stance and key policy rate will remain unchanged at 12.5 percent.
Although, CPI inflation in June 2010 has witnessed some decline and stood at 12.7 percent as compared to 13.1 percent in May this year, however still there are some risks.
“The upward trend in inflation would compel the central bank not to cut key policy rate, therefore it is likely that the SBP would maintain interest rate at 12.5 percent for next two months,” economists said.

Copyright Business Recorder, 2010