The State Bank of Pakistan (SBP) is expected to raise its key policy rate at its upcoming Monetary Policy Committee meeting in early April as the country grapples with high inflation and is in talks with the International Monetary Fund (IMF) for the revival of its bailout package. Arif Habib Limited predicts the SBP will raise its policy rate by 100 basis points to 21% at the meeting. The move is deemed necessary to control inflationary pressure and enable Pakistan to receive the next tranche of its IMF package, which amounts to $1.2bn. Inflation in Pakistan is expected to remain high in the coming months as external and fiscal adjustments, such as additional taxation, weaken the currency and tariff hikes, take effect. Core inflation is also rising due to the weakening of the Pakistan rupee amid ongoing debt repayments and lower financial inflows. AHL conducted a survey and found that 57.7% of respondents believed the SBP would increase its policy rate, with 30.8% predicting a 100bps rise and 26.9% a 200bps. Over 42% believed the policy rate would remain static at 20%.
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