According to the median prediction in a quick survey of 10 economists and market observers, the State Bank of Pakistan (SBP) is likely to increase its key policy rate by 125 basis points at its review on Thursday in an effort to combat 13-year high inflation.
The opinions of the senior professors, economists, and analysts who participated in the survey ranged from 50 to 200 basis points on the amount of the SBP’s hike. Two respondents did not believe that a rate increase was necessary.
In order to combat growing inflation, the central bank increased the benchmark interest rate by 150 basis points (bps) in May, bringing the total increase this year to 400 bps.
Pakistan is dealing with a deteriorating currency, declining reserves, and economic unrest. Consumer prices rose by 21.3% in June from a year earlier, according to data released on Friday. This increase was mostly caused by a 90pc increase in fuel costs since the end of May after the government ended its expensive fuel subsidies. Real interest rates in the economy have abruptly turned negative as a result of the current policy rate of 13.75 percent and the high pace of inflation.