Business

Monetary policy: SBP holds interest rate at 22%

Published

9 months ago

Farwa

In line with market expectations, MCP leaves benchmark interest rate unchanged for the next one and half month.

MPC’s decision is in line with market expectations.
Interest rate unchanged for next one-and-half month.
MPC says inflation rose in September 2023 as expected.

The State Bank of Pakistan (SBP) Monday decided to hold the key policy rate at 22%, in line with the market expectations, with the next announcement on December 12.

In a statement, the central bank said: “At its meeting today, the Monetary Policy Committee (MPC) decided to maintain the policy rate at 22 percent.”

The committee noted that headline inflation rose in September 2023 (31.4%) as expected — a major factor in determining the key policy rate.

However, the SBP said, it is projected to decline in October and then maintain a downward trajectory, especially in the second half of the fiscal year.

The MPC expects inflation to decline significantly in October due to downward adjustments in fuel prices, easing prices of some major food commodities, and a favorable base effect.

“The Committee also reaffirmed its earlier assessment that inflation will decline substantially from the second half of FY24, barring any major adverse developments,” it added.

The central bank acknowledged that the recent volatility in global oil prices as well as the increase in gas tariffs from November pose some risks to the FY24 outlook for inflation and the current account.

“The committee also noted some offsetting factors: These include the targeted fiscal consolidation in Q1; improvement in market availability of key commodities; and the alignment of interbank and open market exchange rates.”

The MPC noted four key developments since its September meeting —

The initial estimates for Kharif crops are encouraging and will have positive effects on other key sectors of the economy.
Second, the current account deficit narrowed considerably in August and September, which helped to stabilise the SBP’s FX reserves position amidst tepid external financing in these two months.
Fiscal consolidation remained on track, with both fiscal and primary balances improving during Q1-FY24.
While core inflation remains sticky, inflation expectations of both consumers and businesses improved in the latest pulse surveys.

The SBP said that in light of these developments, the MPC emphasised on continuing with the tight monetary policy stance.

The MPC, the statement mentioned, reiterated its earlier view that the real policy rate is significantly positive on a 12-month forward-looking basis and is appropriate to bring inflation down to the medium-term target of 5 – 7 percent by the end of FY25.

“However, the MPC noted that this outlook is based on continued fiscal consolidation and timely realization of planned external inflows,” the central bank’s statement added.

Since the last MPC meeting on September 14, when the interest rate was kept unchanged, several developments have taken place — the appreciation of rupee, decrease in petrol prices, expected inflation, decrease in the current account deficit and forex reserves.

Head of Equities at Intermarket Securities Raza Jafri told Geo.tv that the SBP was unlikely to rock the boat on the cusp of the International Monetary Fund (IMF) review and has unsurprisingly kept the policy rate unchanged at 22%.

However, he said, it does seem to be setting up grounds for interest rate cuts going forward, especially if the IMF review is successful and international oil prices remain under control.

Business

An investigation was “launched” into PTA’s inability to get Rs. 78 billion back from Telcos

Published

17 hours ago

Farwa

The PTA has reportedly been instructed to reply to NAB by July 29. According to the enquiry, the national exchequer has suffered losses as a result of the delay in collecting dues.

The PTA has been asked to provide NAB with information about any pertinent records, court proceedings, and overdue bills. The NAB Karachi has summoned the PTA officials to appear with all pertinent documentation.

All of the principle sum has to be paid by the LDI firms, according to sources. But due to judicial stay orders, the collection of dues has been impeded.

These sources further state that a steering group has been established by the Ministry of IT to supervise the issue of dues recovery.

In a previous event, the tariffs levied on importing cell phones from outside were clarified by the Pakistan Telecommunication Authority (PTA).

Contrary to what some internet reports claim, PTA clarified in response to recent news regarding the tariffs on mobile phone imports that there hasn’t been a formal decision to remove these levies in Pakistan.

the PTA.Pakistanis living abroad will be the only ones free from these levies, according to the PTA. A SIM card can be inserted and the phone restarted to temporarily register a device for non-PTA mobile subscribers.

Business

Weekly inflation in Pakistan increased by 0.17 percent.

Published

18 hours ago

Farwa

The SPI for the week under review in the aforementioned group was reported at 321.95 points, as opposed to 321.40 points during the previous week, according to the PBS statistics.

The SPI for the combined consumption group saw a 20.09 percent increase in the week under review compared to the same week the previous year.

The weekly SPI includes 51 necessary items for every spending group and 17 urban areas, with a base year of 2015–16 = 100.

The SPI for the lowest consumption category, which is up to Rs 17,732, grew by 0.08 percent from 311.97 points to 312.22 points this past week.

0.18 percent,The index of consumption for the lowest consumption groups, which are Rs 17,732-22,888, Rs 22,889-29,517, Rs 29,518-44,175 and above Rs 44,175; increased by 0.13 percent, 0.15 percent, 0.18 and 0.19 percent, respectively.

Nineteen (37.25%) of the fifty-one commodities had price increases over the week, eight (15.69%) had price decreases, and twenty-four (47.06%) had unchanged pricing.

On a weekly basis, the following commodities saw significant price decreases: tomatoes (9.19%), onions (2.14%), LPG (1.04%), bananas (0.53%), wheat flour (0.35%), potatoes (0.17%), pulse masoor (0.16%), and bread (0.05%).

Chicken (4.80%), garlic (2.01%), pulse gramme (1.87%), eggs (1.71%), beef (0.93%), gur (0.89%), pulse moong (0.84%), fresh milk (0.45%), firewood (0.23%), and cigarettes (0.12%) were among the items whose average prices increased significantly week over week.

The commodities that saw a year-over-year decline were: wheat flour (31.75%); cooking oil (13.44%); vegetable ghee 2.5 kg (10.42%); vegetable ghee 1 kg (9.85%); mustard oil (8.33%); eggs (5.82%); rice basmati broken (4.15%); and tea package (2.52%).

Gas prices for Q1 (570.00%), onions (96.01%), pulse gramme (40.39%), powered milk (39.11%), garlic (34.61%), pulse moong (29.77%), men’s sandals (25.01%), beef (23.52%), salt powder (23.28%), pulse mash (22.50%), and energy saver (17.96%) were among the commodities whose average prices increased year over year.

Business

The price of gold has drastically dropped in Pakistan.

Published

2 days ago

Farwa

As per the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the cost of 24-karat gold per tola decreased by Rs 2,300, standing at Rs 250,500.

A kilogramme of 24-karat gold costing Rs1,972 less at the local market, making it worth Rs2114,763. Ten grammes of 22-karat gold had a price decrease to Rs196,866 as well.

After losing a significant $43 during the day, the rate per ounce of gold on the international market also decreased. It currently stands at $2,370.

On Thursday, the price of 24-karat silver also experienced a decline, falling by Rs60 to settle at Rs2,860 petal.