State Bank to make a decision on interest rates today
![State Bank to make a decision on interest rates today](https://img.dunyanews.tv/news/2023/October/10-30-23/news_big_images/766581_34842279.jpg)
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Experts predict there won’t be any further hike, some even think a rate cut is coming
KARACHI (Web Desk) – All eyes are on the central bank’s Monetary Policy Committee (MPC) which is going to meet today (Monday) to make a decision on the interest rates – currently at the record-high level of 22 per cent – for the next two months.
The State Bank of Pakistan (SBP) has opted for a cumulative 1,500 basis points increase in its policy rate since October 2021 to curb soaring inflation and support the external balance. However, the rate hasn’t seen any change since July 2023.
The MPC meeting comes as Pakistan is grappling with a weak rupee – inflating the prices – and the resultant record-high and persistent inflation, which has produced an unprecedented cost-of-living crisis.
Read more: Small businesses, common people everywhere are fed up with high interest rates
Although the rupee is strengthening after tumbling to a historic low and the fuel prices have reducing in the last two fortnightly reviews, the consumer rates of different basic commodities, especially food prices, haven’t seen any improvement.
However, the overall trend gives credence to the opinion that inflation has already reached its peak and, therefore, there is no need for another rate hike, with some experts even expecting a rate cut.
Read more: Inflation to dog world economy next year, postponing rate cut calls
It is line with the demand repeatedly made by the business community to slash the interest rates which have crippled the economy due to the high cost of doing business.
But very little, if not chance, of the SBP moving away from monetary tightening – a policy still followed by the developed nations, barring Japan, and prescribed by the International Monetary Fund (IMF) and other top international financial institutions.
Last week, IMF Managing Director Kristalina Georgieva warned about interest rates staying at the current level for a long period.
Read more: Buckle up! Interest rates are here to stay for longer: IMF chief
The world had been living in the "fantasy lane" for nearly 20 years. "We are not thrilled with going from zero to five so quickly, but we are there," she said, referring to the US Federal Reserve's main policy rate.
"So now ... our call to everybody is: buckle up. Make sure that you understand interest rates are here to stay for longer."