The State Bank of Pakistan (SBP) has raised rates by 725 bps since January 2022.
In its last policy meeting in January, the bank raised the key rate by 100 bps to 17%, citing inflationary pressure. Inflation has since increased, with the Consumer Price Index (CPI) clocking in at 27.5% in January.
“CPI for February will be approximately 29-30% and the policy rates need to be adjusted with respect to it,” said Saad Rafi, head of equities Al Habib Capital Markets, a local brokerage firm.
The cash-strapped country is undertaking key measures to secure a $1 billion loan from the International Monetary Fund (IMF), including raising taxes, and removing blanket subsidies and artificial curbs on the exchange rate.
A consensus amongst most of the participants was that the meeting had been brought forward to help meet IMF requirements of a rate hike that have been reported by the media, and pushed for by the government as it rushes to get a staff level agreement.
“It is certainly damaging as far as the market perception is concerned with regards to SBP's independence. The independence probably from the government, and not the IMF," says Fahad Rauf, head of research at Ismail Iqbal Securities. He said the market had already incorporated a 200 bps hike in the last treasury bill auction where the government accepted bids with yields more than 200 bps higher than the policy rate. # Organization Expectation 1 AKD Securities 200 2 Al Habib Capital Markets 250 3 Ammar Habib 200 4 Arif Habib 200 Limited
Equity Global 200
5
FRIM Ventures 200
6
7 Insight Securities 200
8 Ismail Iqbal Securities 200
9 JS Capital 200
10 KTrade 200
11 Lakson Investments 200
12 Pak Kuwait Investment Company 200
13 Sakib Sherani 200
14 SCS Trade 200
15 Topline Securities 200
16 Vector Securities 250
Median 200
(Reporting by Ariba Shahid in Karachi, Writing by Sudipto
Ganguly in Mumbai; Editing by Tom Hogue and Bernadette Baum)
