MPC had earlier projected higher inflation in November than expected, decided to keep the policy rate at 22 percent at its most recent meeting.

Previously State Bank of Pakistan’s (SBP) unexpected decided to maintain the policy rate at 22%, contrary to expectations of a 100-200 basis points hike.

However this time market participants anticipated a status quo policy rate evident from today’s gain in the Pakistan Stock Market.

The MPC acknowledged the impact of the recent spike in petrol prices on consumer prices. Recent decline in global oil prices and increased accessibility to agricultural products.

Even though it recognised potential implications for the inflation forecast. Based on a 12-month forecast, the Committee remains optimistic about the real interest rate and expects inflation to keep falling.

Since the October meeting, a number of positive developments have surfaced. One encouraging development was the staff level agreement’s successful completion for the first review under the IMF SBA programme, which is anticipated to increase the foreign exchange reserves of the State Bank of Pakistan (SBP) and attract new funding.

Moreover, the MPC’s forecast for a modest economic recovery was supported by the quarterly GDP growth for Q1–FY24. Surveys of business and consumer confidence showed encouraging signs of improved attitudes. Nonetheless, core inflation is still high and is gradually declining.

MPC confirmed that the current monetary policy stance is appropriate to reach the milestone of inflation target of 5-7 percent. This too by the end of FY25,

This evaluation is based on the assumption of ongoing, deliberate budgetary restraint and the prompt realisation of anticipated outside funding.

Based on early estimates, the real sector is expected to see a moderate recovery in real GDP during FY24; Q1-FY24 is expected to grow by 2.1 percent year over year.


This growth was largely driven by the agriculture sector, with the manufacturing sector seeing a more modest rebound. The services sector, however, continued to grow slowly.


With the deficit falling by 65.9 percent on an annual basis to $1.1 billion from July to October of FY24, the external sector experienced a significant improvement in the current account balance.

Aliments, especially rice, contributed to a slight increase in exports while imports fell. The SBP’s foreign exchange reserves have been gradually decreasing as a result of ongoing debt repayments and poor official inflows since July, even though remittances have also increased.

Exhibiting robust growth in both tax and non-tax revenues, the Committee noted that the fiscal situation has continued to improve. Encouraging macroeconomic stability through fiscal consolidation that prioritises tax base expansion and limits on discretionary spending is still imperative.


As of November 24, 2023, the growth of broad money (M2) in the monetary system had slowed to 13.7 percent year over year.

The inflation outlook indicated that the increase in petrol prices contributed significantly to November’s inflation and predicted that the second half of FY24 would see a decline in headline inflation as a result of factors like moderated global commodity prices, lessened supply constraints, contained aggregate demand, and a favourable base effect.



Experienced Senior Research Analyst



Sikander Raza, a Senior Technical Analyst



Hamza Saleem, a Senior Business Analyst



Irsa Sajjad, as a Research Analyst for Equities

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