Policy rates likely to remain unchanged

According to Spectrum Securities Limited, the Central Bank is likely to maintain Policy Rate in upcoming Monetary Policy State Bank of Pakistan, scheduled to announce its next 2-month monetary policy on Jan’22, 2021.

In the current economic scenario, experts foresee the status quo in the policy rate is the plausible option for the Central Bank, as the economy still needs an accommodative policy to accelerate recovery.

Easing monetary policy to continue to aid the economy, the primary reason for relaxing monetary policy remained to stimulate the economy and save employment. The analyst believes, the current recovery in the economy led by the SBP policies and in the presence of the second wave, the continuous support from the monetary side would aid the current economic retrieval. Therefore, we foresee the SBP to maintain the status quo on the policy rate. Currently, inflation looks under control; however, an increase in oil prices and power tariff accelerate non-food inflation while the rise in food prices would speed up inflation. The local currency is showing stability at ~160/USD, the healthy external account of the country amid strong inflows in remittances, Roshan Digital Accounts and decline in imports.

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