Summary Interest rate has been on hold at 5.75 percent since May 2016.
KARACHI (Dunya News) - The State Bank of Pakistan may keep interest rate on hold at 5.75 percent when the board of the directors of the central bank to meet on the last working day of the week.
Interest rate has been on hold at 5.75 percent since May 2016 as the inflation rate remained under the government’s target and the commodity prices remained under check owing crude oil prices which moved under 60 dollars per barrel. But recently owing to OPEC’s decision to cut daily output put pressure on the crude oil price which now showing steady growth and risen to December 2014 level.
However, the interest rate is likely to remain unchanged following the assessment drew from the survey conducted by the Dunya News asking around 27 financial experts belonging to leading brokerage houses, banks, mutual funds and some investment banks. Nearly 21 were of the view that the interest rate would peg on the previous level but after 20 months of analysis on the interest rate for the first time six analysts differ from the majority.
They were of the opinion that during the upcoming review, the central bank might raise the rate from 25 basis points to 50 basis points. But the majority said the room for increase is thin but in the new fiscal year starting July 1, 2018 in September or November review, the interest rate hike is expected.
The reason could be cemented from the fact from the recent treasury bills auction where banks bought treasury bills of three months only whereas they haven’t place any bids for six months and one year treasury bills. While banks participation in long term bonds or Pakistan Investment Bonds was also absent for five years, 10 years, 20 years and 30 years.
