SBP expected to maintain rates at record 22%

KARACHI: Pakistan’s central bank is widely expected to hold its key interest rate at a record 22% for the sixth straight policy meeting on Monday as inflation risks continue to loom, but a majority of analysts expect rate cuts from the second quarter of this year. Monday’s policy decision would be the last ahead of the April expiry of a $3 billion Stand-By Arrangement with the International Monetary Fund (IMF). The median estimate in a Reuters poll of 17 analysts predicts the State Bank of Pakistan (SBP) will hold rates steady. Three analysts are forecasting a 100-basis-point (bps) cut, while one expects a 25-bps cut on Monday. Fourteen of those surveyed expect a rate cut in the April-June quarter. Pakistan’s key rate was last raised in June to fight persistent inflationary pressures and to meet one of the conditions set by the IMF for securing the bailout. The country’s consumer price index (CPI) for February rose 23.1% year-on-year, its slowest rate since June 2022, partly due to the “base effect”.