Market Experts Expect 200 BPS Increase in Policy Rate

Majority of market experts expect an increase in policy rate by 200 bps in the upcoming Monetary Policy Committee (MPC) meeting, according to a poll conducted by Topline Research.

The State Bank of Pakistan’s (SBP) next Monetary Policy Committee (MPC) meeting will be held on April 4. To gauge the view on monetary policy outlook, Topline Research conducted a poll of key market participants on expectations over policy rate and key macro estimates.

As per the survey, majority of the participants (92.5 percent) expects policy rate to increase by atleast 100 bps. Out of these, 63 percent participants expect a 200 bps increase, and 5 percent participants expect a 300 bps increase while 8 percent participants expect no change in policy rate.

Policy rate going forward

Responding to question on where they see policy rate in 12 months (March 2024), 8 percent of the participants anticipate policy rate to be above 22 percent. 19 percent participants expect policy rate to be between 20-22 percent while 25 percent expect policy rate to be between 18-22 percent.

On the other hand 48 percent participants expect policy rate to be below 18 percent of which 18 percent participants expect policy rate below 16 percent.

In its last MPC meeting on March 2, the central bank raised the policy rate by 300 basis points to 20 percent, the highest ever policy rate since October 1996.

In its statement at the time, the MPC said that average inflation this year is now expected in the range of 27–29 percent against the November 2022 projection of 21–23 percent. In this context, the MPC emphasized that anchoring inflation expectations is critical and warrants a strong policy response.

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