Monetary policy on Nov 30

KARACHI: The central bank is expected to raise interest rate by another 50 to 100 basis points in the monetary policy announcement scheduled on Friday (tomorrow) as inflationary pressure is yet to subside, analysts said on Wednesday.

The State Bank of Pakistan (SBP) will unveil its monetary policy for the next two months and a possible hike would be the fifth time this year. The SBP has increased the policy rate by a cumulative 275 basis points since January. It raised the policy rate by 100 basis points to 8.5 percent in the last monetary policy announced in September.

An analyst said there might be a further 100 basis points increment as the central bank has already revised up consumer price inflation estimate to 6.5 to 7.5 percent from the previous range of 6-7 percent in July.

Analysts see monetary tightening would continue in FY19. “We see stronger inflation numbers and further interest rate lift-off,” Alfalah Securities said in a report. “We expect another 200bps hike in policy rates in remaining FY19, and discount rate to reach 11/10.5 percent by end of FY19/20 respectively.”