KARACHI: The Monetary Policy Committee (MPC) of the State Bank of Pakistan will meet on Monday to review the interest rate for the next one and a half months. In its previous meeting on July 7, the MPC increased the interest rate by 125 basis points.
On Monday, August 22, the MPC will decide the interest rate for the final week of August and the month of September.
The MPC usually increases the interest rate to control inflation and relaxes it to boost economic activity.
The interest rate has already been increased to a whopping 15% after the 125 basis points hike on July 7. This is still lower than the 19% interest rate in the late 1990s.
The interest rate began to rise in September 1 after the economic activities resumed following Covid-19 related lockdown and the economy overheated.
While inflationary pressure has largely subsided, some experts still believe that the central bank can increase the interest rate in view of falling oil prices.
A majority of financial experts, however, think the interest rate will remain unchanged.
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Arif Habib Securities conducted a survey to enlist expert opinions from people in banking, insurance, and other sectors.
The results of the survey indicated that at least 68% of the participants said that the interest rate will remain unchanged while 16% said that it may be increased by up to 75 basis points or less.
Around 8% of the experts surveyed said that interest rate could go up by 100 basis points. A small group of 4% experts aid that the policy rate could be hiked by 125 basis points and another group of 4% said that it could increase by 150 basis points.
A similar survey was conducted by Topline Securities, which revealed that 56% of the experts said that the interest rate will remain unchanged.
At least 43% said that the rate could go up while a minuscule 1% believed that it could go down.
