KARACHI: The State Bank of Pakistan’s Monetary Policy Committee (MPC) is holding a key meeting today to decide the country’s benchmark interest rate for the next six weeks, with economists widely expecting a hike due to mounting inflationary pressure.
The MPC will review Pakistan’s overall economic situation and inflation data before announcing the new policy rate later today. The decision will remain in effect for the next one-and-a-half months.
The meeting comes after inflation climbed back into double digits in August, reversing the easing trend seen earlier this year. The surge has put pressure on the central bank to act to keep price growth in check.
During the last policy review, the SBP had kept the policy rate unchanged at 11.50 percent. But with August CPI numbers showing a sharp uptick, analysts say the case for another increase has strengthened.
Economic experts believe the State Bank may opt for a rate hike this time to counter rising inflation and anchor expectations. “Given the double-digit inflation in August and the underlying demand pressures, the SBP is likely to raise the policy rate,” one analyst said. “The goal will be to cool demand and bring inflation back toward the target band. “Other economists argue the committee could also weigh the impact of higher borrowing costs on growth, businesses, and government debt servicing before making a final call.
The policy rate directly affects the cost of borrowing for consumers and businesses. A hike would mean more expensive loans for cars, homes, and working capital, but it could also help slow price increases for food, fuel, and other essentials. The SBP’s decision is also being watched closely by the IMF and markets as Pakistan continues to navigate fiscal challenges and external financing needs.
The MPC’s announcement is expected later today after the conclusion of the meeting.
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