Tight monetary policy likely to continue
KARACHI: As the world continues to grapple with uncertain oil prices, the State Bank of Pakistan (SBP) is unlikely to meet its FY27 mid-term inflation target of 5-7 per cent, financial experts and analysts said. Consumer Price Index-based inflation of 10.3 per cent in September clearly indicates that industry, businesses, and the general public will bear the brunt of these cost-push inflationary…
The State Bank of Pakistan is expected to maintain a tight monetary policy, despite inflation rising to 10.3 per cent in September, according to financial experts and analysts. This suggests that the central bank is unlikely to meet its mid-term inflation target for 2027 of 5-7 per cent. The Consumer Price Index indicates that the general public will bear the burden of these cost-push inflationary pressures.
Industry and businesses are struggling, with existing industries finding it difficult to survive. The current level of economic growth of 3-3.7 per cent annually is insufficient to create jobs and tackle poverty, which affects 44 per cent of the population. Experts argue that the central bank's policy rate of 11.5 per cent is appropriate given double-digit inflation, and expect inflation to moderate after December if oil prices return to around $80 per barrel.
However, others believe the central bank will maintain the tight monetary stance to support sustainable growth. Higher domestic fuel prices help adjust demand and imports, while a market-based exchange rate is seen as preferable to a weaker rupee.
Written by urgent.news from Dawn's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
