The State Bank of Pakistan is anticipated to hike interest rates by an additional 2% at its upcoming Monetary Policy Committee (MPC) meeting in a further effort to unlock the International Monetary Fund (IMF) program.
The IMF and Pakistan were supposed to reach a staff-level agreement on February 9. The administration, though, was unable to persuade the international lender.
The Shehbaz Sharif-led government is making urgent efforts to secure the urgently required funding, although the IMF is dissatisfied with its previous actions. According to the sources, Pakistan was required to raise interest rates by 4% by the IMF. According to the interest rate, the fund believed that Pakistan’s inflation was lower.
The IMF is requiring Islamabad to hike interest rates by another 2% after the SBP recently increased them by 2%.
According to information obtained, the SBP’s MPC will convene on April 4 to review the interest rate in response to an IMF request. The SBP would raise the interest rate by 2% in accordance with the Fund.
The SBP unexpectedly increased the monetary policy rate on March 2 by 300 basis points to 20%. “In light of recent external and budgetary adjustments, this decision reflects a worsening of the inflation outlook and expectations. The SBP had stated in a statement that the MPC believed this outlook called for a robust policy response to anchor inflation expectations around the medium-term objective of 5%-7%.