Discount Rate increased by 50 bps

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  • SBP Cited inflationary pressures continue, elevated fiscal deficit and still high current account

In its 2nd Monetary Policy announcement of the year, State Bank of Pakistan increased the Policy Rate by 50 bps citing impending inflationary pressure, Rising Fiscal and Current account deficits.

Monetary Policy Statement cites : “The Monetary policy committe noted that sustainable growth and overall macroeconomic stability requires further policy measures as: (i) underlying inflationary pressures continue; (ii) the fiscal deficit is elevated, and (iii) despite an improvement, the current account deficit is still high.”

Analysts have predicted an increase of 25 bps to 50 bps increase in discount rate owing to cited reasons. Moreover, market expects that increased pressure from IMF for bailout program also led to an increase.

Earlier, The Mint PK has predicted an increase of 50 bps keeping in view current circumstances

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