Pakistan Economy: For upcoming MPC, keep calm and carry on, (AKD Daily, Sep 18, 2020)
AKD Daily
Pakistan Economy: For upcoming MPC, keep calm and carry on
- The MPC of the SBP is slated to announce its monetary policy on Sep 21’20 (Monday), where consistent improvement in keep account coupled with a need to support domestic economic activity should keep the MPC to maintain its accommodative bias. We expect the committee to keep its policy rate on hold at 7.0%.
- Inflation outlook remains uncertain due to low visibility on the timing and scale of potential utility rate adjustments. In our base case, we expect inflation to average at 8.25%YoY in FY21, modeling a 20%/10% hike in electricity/gas rates in Mar’21.
- For Sep’20, we expect the headline inflation to marginally increase to 8.30%YoY vs. 8.21%YoY in Aug’20 and 11.38%YoY in the SPLY, with a favorable base effect keeping headline reading in check. On a MoM base, the inflation is likely to accelerate to 0.85%MoM (vs. 0.63% in the preceding month), where price increase in certain food items remain key drivers.
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