Market foresees 100-200bps policy rate hike

After the complete surrender by the PMLN-led coalition government to meeting the IMF conditions for the revival of the programme, the financial market looks firm that the State Bank of Pakistan (SBP) would increase the interest rate in the range of 150 to 200 basis points in the next monetary policy to be announced on Monday. State Minister for Finance Aisha Ghouse Pasha said on Thursday that the government was ready to implement all conditions to bail out the economy with IMF help. Bankers, financial experts and analysts expect a hike in the SBP’s policy rate keeping in view the surging inflation which hit 24.5 per cent in December 2022, but they are not sure about the size. The IMF conditions include a market-based exchange rate, an increase in electricity and gas prices and the imposition of new taxes to generate sufficient liquidity to compensate for the first quarter fiscal slippages.