State Bank expected to remain cautious over policy rate

The State Bank’s monetary policy meeting, scheduled for June 10, has received more attention from the stakeholders, as the policy would be announced without getting input from budgetary measures and talks with the IMF for another loan. The government seems willing to provide relief to the common people and some measures in this context could be inflationary. Therefore, some experts said the State Bank would be again cautious despite room for a significant rate cut due to a large difference between the headline consumer inflation of 11.8 per cent and the existing policy rate of 22pc. In a survey conducted by Topline Securities, some 90pc of participants expected a rate cut, but they differed over the extent of the reduction, with estimates ranging from 100 to 300 basis points.