SBP has room to cut policy rate: analysts

Researchers and analysts say the State Bank of Pakistan (SBP) could reduce its policy rate by 100 to 150 basis points at Monday’s Monetary Policy Committee meeting. The upcoming monetary policy review is of high importance, particularly given the declining trend of inflation and a stalemate-like situation for economic growth. Despite some firm arguments in favour of maintaining the interest rate at the current level, some analysts said the situation is conducive to cutting it. Analysts said the average forward 12-month inflation pattern is expected to be around 15pc to 16pc, which means the current interest rate of 22pc is much higher in this context. “I believe the State Bank of Pakistan now has the option to reduce the interest rate up to 150bps in the next monetary policy,” said Pak Kuwait Investment Company Ltd Head of Research Samiullah Tariq.