SBP to announce monetary policy on 29th

SBP Governor Shahid Kardar says government borrowed Rs184 billion ($2.15 billion) from the central bank since July 1.


Reuters November 15, 2010

KARACHI: The State Bank of Pakistan (SBP) will announce its monetary policy for the subsequent two months on November 29, Syed Wasimuddin, chief spokesman for the central bank said on Monday.

“It is likely that the central bank will continue to hike the key policy rate, by at least 50 basis points, considering the fiscal indiscipline and to counter inflation,” said Mohammed Sohail, chief executive at Topline Securities Limited.

In the last monetary policy review on September 29, the central bank increased its key policy rate by 50 basis points to 13.5 per cent, in a bid to curb deepening fiscal deficit and combat rising inflation.

SBP Governor Shahid Kardar said on Monday that the government had borrowed Rs184 billion ($2.15 billion) from the central bank since July 1. Government borrowing from the central bank can fuel inflation as it increases money supply.

“Inflation for next month could be between 17 and 18 per cent due to a hike in sugar prices and electricity tariffs, which means the central bank could further hike the policy rate,” said Khalid Iqbal Siddiqui, director at Invest and Finance Securities Limited.

The Consumer Price Index rose 15.33 per cent in October. The central bank increased its forecast for average inflation to vary between 13.5 and 14.5 per cent for fiscal year 2010-11, following the devastating summer floods. The government’s original target for inflation in the fiscal year ending June 30 was 9.5 per cent.

Published in The Express Tribune, November 16th, 2010.

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