In a crucial move to bolster economic stability, the State Bank of Pakistan (SBP) is poised to keep its key policy rate steady at an upcoming policy meeting. Analysts anticipate this decision, marking the fourth consecutive meeting, as a strategic response to the anticipated easing of inflation in the coming months, signaling potential future rate cuts aimed at stimulating the nation’s economy.
Pakistan, having secured a $3 billion loan program from the International Monetary Fund (IMF) in July, faced the challenge of economic recovery under a caretaker government. The approval of the IMF loan, designed to prevent a sovereign debt default, came with conditions that have complicated efforts to curb inflation. Despite this hurdle, the economic landscape shows promising signs of progress.
Pakistan’s key rate hit a record high of 22% in June and has remained unchanged in the last 3 months. A Reuters poll of 12 analysts shows a general agreement on keeping the rate unchanged in the next meeting, with only one analyst calling for a 0.1% cut.
Recent data from the Pakistan Bureau of Statistics (PBS) indicates an annual inflation rate of 29.2% in November, a slight increase from October but notably below the peak of 38% observed in May. This data suggests a positive trend, aligning with expectations of easing inflation in the foreseeable future.
Investors already expect Pakistan’s interest rates to peak. IMF program progress boosted markets, raising both stocks and the currency. Pakistan’s benchmark index hit a record high in the week ending December 8, soaring 7.3% to 66,000 points. This represents a gain of 4,532 points.
The SBP faces economic challenges, while Pakistan awaits its actions. Balancing inflation and stimulus is crucial. A positive market response reflects confidence in Pakistan’s economic path and stability efforts.
 is poised to keep its key policy rate steady at an upcoming policy meeting. Analysts anticipate this decision, marking the fourth consecutive meeting, as a strategic response to the anticipated easing of inflation in the coming months, signaling potential future rate cuts aimed at stimulating the nation's economy.){kind=link}