The State Bank of Pakistan (SBP) is expected to hold its policy rate on Monday, a Reuters poll showed, as many analysts shifted their previous view of a cut in the wake of Israel\u2019s military strike on Iran, citing inflation risks from rising global commodity prices.<\/p>\n
Israel said on Friday (today) it targeted nuclear facilities, ballistic missile factories and military commanders in a \u201cpreemptive strike\u201d to prevent Tehran from building an atomic weapon.<\/p>\n
Several brokerages had initially expected a cut but revised their forecasts after the Israeli strikes sparked fears of a broader conflict. The escalating hostilities triggered a sharp spike in oil prices \u2014 a worry for Pakistan given the broader impact on imported inflation from a potentially prolonged conflict and tightening of crude supplies.<\/p>\n
Eleven of 14 respondents in a snap poll expected the SBP to leave the benchmark rate unchanged at 12 per cent. Two forecast a 100 basis-point cut and one predicted a 50 bps cut.<\/p>\n
\u201cThere remains an upside risk of a rise in global commodity prices in light of geopolitical tensions which could mark a return to inflationary pressures,\u201d said Ahmad Mobeen, senior economist at S&P Global Market Intelligence.<\/p>\n
\u201cThe resultant higher import bill could also threaten external sector performance and bring pressure to the exchange rate.\u201d<\/p>\n
Inflation has been declining for several months after it soared to around 40pc in May 2023.<\/p>\n
Last month, however, inflation picked up to 3.5pc, above the finance ministry\u2019s projection of up to 2pc, partly due to the fading of the year-go base effects. The SBP expects average inflation between 5.5pc and 7.5pc for the fiscal year ending June.<\/p>\n
The SBP paused its easing cycle in March after cumulative cuts of 1,000 basis points from a record high of 22pc, and resumed it with a 100-basis-point reduction in May.<\/p>\n
The policy meeting follows the release of a tight annual budget, which saw defence spending raised by 20pc but overall expenditure was reduced by 7pc, with GDP growth forecast at 4.2pc.<\/p>\n
The government says the $350 billion economy has stabilised under a $7bn International Monetary Fund bailout that helped it stave off a default threat.<\/p>\n
Some analysts are sceptical of the government\u2019s ability to reach the growth target amid fiscal and external challenges.<\/p>\n
Abdul Azeem, head of research at Al Habib Capital Markets, which forecast a 50-bp cut, said a lower rate could \u201csupport the GDP target of 4.2pc and reduce the debt financing burden\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"
The State Bank of Pakistan (SBP) is expected to hold its policy rate on Monday, a Reuters poll showed, as many analysts shifted their previous view of a cut in the wake of Israel\u2019s military strike on Iran, citing inflation risks from rising global commodity prices. Israel said on Friday (today) it targeted nuclear facilities, […]<\/p>\n","protected":false},"author":1,"featured_media":9998,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-9997","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-news"],"_links":{"self":[{"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/posts\/9997","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9997"}],"version-history":[{"count":1,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/posts\/9997\/revisions"}],"predecessor-version":[{"id":9999,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/posts\/9997\/revisions\/9999"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=\/wp\/v2\/media\/9998"}],"wp:attachment":[{"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9997"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9997"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/weeklyyoung.pk\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9997"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}