MPC meeting on 14th: Policy rate expected to stay unchanged

Business Recorder reported that the SBP's Monetary Policy Committee is largely anticipated to hold its benchmark rate steady when it convenes on September 14. Rising inflation linked to costly crude, with oil at USD 95 per barrel, is seen narrowing room for any easing. The committee left the rate at 11.5 percent on July 27, in line with what the market had priced in.

A Topline Securities poll found 84 percent of respondents expect no change on September 14, while 14 percent foresee a 50bps increase and 2 percent a 100bps rise. Topline also noted a real spread above 250bps, improving reserves and a contained current account, all supporting the status quo view. Petrol prices have risen Rs24 per liter since the last review, while diesel fell by Rs2 per liter, and renewed US and Iran tensions have added uncertainty to oil prices.

Topline also cited the USD 3 billion Eurobond launched lately as supporting the external outlook. The report said a 50 to 100bps hike could follow in the October or December meetings if oil and food inflation stay sticky. It also expects the rate to remain at 11.5 percent until March 2027, with a rise possible should oil stay above USD95 per barrel.