Investors claim that the State Bank of Pakistan (SBP) may increase interest rates this week in an off-cycle review as the South Asian country is under pressure to improve its financial situation in light of a $1 billion loan tranche it is requesting from the International Monetary Fund (IMF).
The central bank’s policy rate, which is currently 17%, is expected to raise by at least 200 basis points (bps), according to market participants in a recent treasury bill auction. The rates the Pakistani government established at the auction to raise the cash are the foundation for the anticipated hike.
In the sale on Wednesday, the government made Rs258 billion ($991.54 million).
The three-month, six-month, and 12-month tenor cut-off rates increased by 195 basis points, 206 basis points, and 184 basis points, respectively, from the previous auction.
The cash-strapped nation is taking important steps to obtain IMF funding, such as raising taxes, eliminating blanket subsidies, and placing artificial exchange rate controls. According to media sources, the agency anticipates a hike in the policy rate even if the administration anticipates reaching an agreement with the IMF soon.
The monetary policy committee of the central bank will meet again on March 16th. Nonetheless, off-cycle rate reviews are widespread in Pakistan.
A rate increase is approaching and might occur as soon as this Friday, according to Adnan Sheikh, Assistant Vice President of Research at Pak Kuwait Investment Company.
