SBP monetary policy: Market split on possible interest rate hike

The State Bank of Pakistan will hold a meeting of the Monetary Policy Committee (MPC) on April 27, where market expectations regarding interest rates appear to be divided.

According to a survey, 53% of participants expect an interest rate hike, with the majority predicting an increase of 50 to 100 basis points, while a limited number are of the opinion that it will increase by less or more than that.

In contrast, 47% of participants believe that the central bank will maintain the current policy rate, while a small number also expect a reduction in interest rates.

Secondary market data also indicates a cautious attitude. Six-month Treasury bills and KIBOR rates are above 11 percent, respectively, higher than the policy rate of 10.5 percent.

Analysts say rising global oil prices and geopolitical tensions are raising inflationary risks, which could lead to limited tightening by the central bank.