A recent poll by Topline Research surveyed market participants on their views and macro estimates for the upcoming Monetary Policy announcement on January 23, 2023.
The results showed that 74% of participants expect a policy rate increase of 100-200bps, with 37% expecting a 100bps increase, 18% anticipating a 150bps increase, and 19% forecasting up to a 200bps increase. Additionally, 2% expect more than a 200bps increase, 5% anticipate a 50bps increase, 18% expect no change, and only 2% predict a rate cut.
Since the last monetary policy statement on November 25, 2022, Consumer Price Index (CPI) inflation has risen to 24.5% in December 2022, compared to 23.8% in November 2022. Urban core inflation (excluding food and energy) remained at 14.7% in December 2022, while rural core inflation increased to 19.0% in December 2022, compared to 18.5% in November 2022.
Due to supply-side disruptions and recent increases in food prices, inflation is expected to remain high in the short term. The State Bank of Pakistan (SBP) predicts an average inflation rate of 21-23% in the fiscal year 2023, while Topline Research estimates a rate of 26% for the same period.
External challenges continue to mount as foreign exchange reserves have decreased to $4.3 billion, a decrease of $3.1 billion from November 25, 2022, providing barely enough coverage for one month of imports.
This is due to large debt repayments and a slowdown in foreign inflows. In its last monetary policy statement, the State Bank of Pakistan (SBP) highlighted concerns about declining foreign flows due to domestic political uncertainty and a tightening global situation amidst rising global interest rates.
Topline Research predicts that the policy rate will increase by 100 basis points in the upcoming monetary policy, but if inflation and external issues persist, further rate hikes can no longer be neglected.
Most participants anticipated that the PKR/USD exchange rate will range from Rs. 240-260 by June 2023. About 13% expect it to be around Rs. 260-270, while 11% expect it to be above Rs. 270. On the other hand, 11% expect it to be in the range of Rs. 230-240, while only 3% expect it to be around Rs. 220-230.
Source: Topline Research
Ishaq is black market pro and thug party corruption is at peak same like Imran facilitate his friends. Increase in policy rate is very necessary. Govt totally lacks the credibility of attracting investors including people inside Pakistan.