The State Bank of Pakistan is going to announce the key policy rate soon. Most market participants expect that there will be no change in the rate. The bank will issue a press release stating its decision. Since the last Monetary Policy Committee meeting on September 14, some important economic developments have occurred. The Pakistani rupee has gained value by over 6% and petrol prices have decreased by about 14%. The Consumer Price Index-based inflation has increased to 31.4% in September 2023, compared to 27.4% in the previous month and 23.2% in September 2022. Pakistan’s current account deficit in September 2023 was $8 million, lower than the $360 million deficit in the same month in 2022. The country’s foreign exchange reserves held by the central bank have also declined to $7.5 billion. Market experts predicted that the central bank would maintain the rate in the upcoming meeting. They expect inflation to continue decreasing in the coming months. These expectations are based on factors such as reduced demand, stable global commodity prices, and a high base effect. The government has committed to taking further action in future meetings until inflation expectations improve as part of the IMF agreement. Despite securing a deal with the IMF, the Pakistani economy still faces challenges of rising inflation and decreasing reserves.
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