State Bank of Pakistan (SBP) is likely to raise the interest rate by 2 percent at the upcoming meeting of the Monetary Policy Committee (MPC) to unlock the stalled IMF loan program.
The International Monetary Fund (IMF) and Pakistan were supposed to sign a staff-level deal on February 9.
Tomorrow, the Monetary Policy Committee (MPC) will convene to talk about the interest rate. According to sources with knowledge of the situation, the interest rate may increase from 20 to 22 percent to satisfy an IMF requirement.
The International Monetary Fund (IMF) has reportedly requested that the interest rate be raised to be close to the inflation rate, they added.
The government led by Prime Minister Shehbaz Sharif is making desperate attempts to obtain desperately needed funds, but the IMF does not appear to be pleased with the previous actions done by the incumbent government.
Monetary policy: SBP jacks up the interest rate to 20pc
The State Bank of Pakistan (SBP) increased the monetary policy rate to 20% on March 2 by 300 basis points.
“In light of recent external and fiscal adjustments, this move shows deterioration in the inflation outlook and expectations. According to the statement, the Monetary Policy Committee (MPC) “believes that this outlook justifies a robust policy response to anchor inflation expectations around the medium-term goal of 5-7 percent.