Tensions with India to ‘influence’ SBP’s monetary policy decision

Despite a long-term decline in inflation and real interest rates above 11 per cent, opinions on the State Bank of Pakistan’s (SBP) likely decision on the policy rate are divided, with trade and industry sectors advocating for a significant cut. Researchers conducted polls to gauge market sentiment, but the 0.3pc inflation in April has caused division among those who were confident there would be no change in the interest rate. The SBP’s Monetary Policy Committee will meet on Monday to set the key interest rate for the next two months. The central bank had delivered a surprise by leaving its policy rate unchanged in the last review, disappointing the business community, which was demanding a substantial cut of at least 500bps. Many experts were expecting a slight cut of up to 50bps.