SBP introduces calendar of monetary policy meetings

KARACHI: In another major step to keep abreast with the international practices, the central bank on Thursday introduced advance calendar of monetary policy committee meetings.

“The State Bank of Pakistan (SBP) has decided to begin announcing a half-yearly schedule of monetary policy committee (MPC) meetings on a rolling basis,” it said in a statement.

The SBP said this is another step towards making the process of monetary policy formulation more predictable and transparent.

The central bank usually announces monetary policy after a month gap. For more than a year now, the policy has been announced abruptly with people speculating on the policy decision time.

The last Covid year saw an acceleration in the unscheduled monetary policy announcements, which were eight times.

Mohammad Sohail, CEO of Topline Securities said this is step toward professionalism and transparency.

“Speculation will also come to an end,” Sohail said, “as people would know the schedule.

The calendar followed a qualitative guidance on monetary policy by the central bank.

The dates for the next four meetings this year are Friday, 28th May, Tuesday, 27th July, Monday, 20th September, and Friday, 26th November.

A minimum of six MPC meetings are scheduled every year. In addition, the MPC can convene emergency meetings during the intervening period, if required.

“In taking this step, SBP is following international best practices,” said the SBP. “To manage expectations of economic agents, many central banks across the globe release the schedule of Monetary Policy Committee meetings in advance. This practice is consistent with the objective of reducing uncertainty around monetary policy decision making.”

The SBP said clear communication helps to make central banks more transparent, and thereby contributes to enhancing their accountability. Central bank communication and transparency are also key for effective transmission of monetary policy decisions. In this context, SBP has over the years been seeking to modernize and increase transparency in the monetary policy making process, in line with international best practices.

In 2009, it was decided to hold at least 6 meetings on monetary policy, envisaged to take place in the calendar months of January, March, May, July, September and November. It was also decided to hold a press conference to announce the monetary policy decision in the months of january and july, to supplement the monetary policy statement.

In 2015, after the introduction of an independent monetary policy committee through an amendment in the SBP Act, two major changes were introduced to increase transparency. First, SBP started publishing minutes of the MPC meetings on its website. Second, the voting pattern of the MPC members was also made public.

In 2020, to make monetary policy communication more effective, SBP enhanced interactions with analysts, the media, various business forums, academics, and investors through regular briefing sessions with its senior management.

In January 2021, in light of the extreme uncertainty caused by the COVID pandemic, the MPC decided to provide forward guidance on monetary policy for the first time to facilitate policy predictability and decision-making by economic agents.