The Monetary Policy Committee of the State Bank of Pakistan is scheduled to announce its monetary policy on 21-September-2020(Monday) where Business Tribune expects the Status Quo to be maintained owing to consistent improvement in Macro-Economic Fundamentals. SBP is more likely to freeze the Interest Rates at current levels to support domestic economic activity and maintain its accommodative bias.

Uncertain Inflation Outlook

Keeping in view the elevated Inflation trend in July and August and higher Expected Inflation in September (upward of 8%), the Inflation Outlook in the near term remains Uncertain. With the rise in Food Inflation after some respite, Inflation may increase going onwards. Over the medium term, the inflation outlook remains uncertain due to low visibility on the timing and level of possible adjustments in Electricity/Gas tariffs.

The overall trade activity in the country highlights that the country is in the early phase of Recovery post COVID19 induced downturn. Furthermore, Improvement in Current Account in July and better Foreign Exchange Reserves Position will force SBP to decide in favour of Maintaining Interest Rates and adopt the “Wait and See” approach.

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