Tag: interest rate hikes

  • SBP likely to hike key policy rate by up to 300 basis points next month

    SBP likely to hike key policy rate by up to 300 basis points next month

    The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) will likely meet at its upcoming meeting to decide on the key policy rate, and the market anticipates a possible rate increase of up to 300 basis points.

    According to the analysts contacted by the Brecorder, the SBP is likely to increase the rate from its current historic high of 22 per cent. As per the advance calendar issued in July, the SBP is currently slated to hold its MPC meeting on September 14.

    Notably, the central bank has previously taken the initiative to declare changes in its key policy rate through ’emergency’ meetings, similar to what occurred in June.

    Market speculation hints that the central bank might adopt a more patient approach this time, making an emergency meeting less probable.

     Tahir Abbas, the Head of Research at Arif Habib Limited (AHL), foresees a rate hike ranging between 100 and 150 basis points.

    He emphasised, the inflation rate is projected to remain elevated not only in August but also in the upcoming months. Furthermore, the persistent depreciation of the currency might compel the SBP to push interest rates upwards.

    Abbas added, “We expect a policy rate hike of around 100-150 bps.”

    In a previous report, AHL stated that headline inflation is expected to climb higher in August, surpassing the 28.3 per cent figure recorded in July 2023.

  • Seasonal demand: Gold price increases by Rs5,600 to Rs207,500 per tola

    Seasonal demand: Gold price increases by Rs5,600 to Rs207,500 per tola

    On Friday, gold prices in Pakistan experienced a significant increase due to seasonal demand and the rush to purchase the precious metal during Ramadan and the upcoming wedding season.

    According to data from the All-Pakistan Sarafa Gems and Jewellers Association (APSGJA), the price of 24-carat gold surged by Rs5,600 per tola and Rs4,801 per 10 grammes to settle at Rs207,500 and Rs177,898, respectively.

    In recent sessions, the price of gold had decreased due to a decline in international prices and the appreciation of the Pakistani rupee against the US dollar. However, the bullion sparkled once again on Friday as local markets reopened following a day off for Pakistan Day.

    The price of gold in Pakistan is strongly influenced by the rupee-dollar parity since almost all of the country’s gold demand is met through imports, with traders following international prices to set rates. The metal is imported by jewelers against the US dollar and UAE dirham before its price is converted into rupees.

    The APSGJA also noted that the price of gold in Pakistan was Rs12,000 per tola cheaper than in the Dubai market, indicating that the Pakistani gold market was currently less expensive than the global market.

    Meanwhile, in the international market, gold prices continued to rise on Friday, buoyed by a drop in Treasury yields after the US Federal Reserve hinted at a possible end to its monetary tightening cycle. The per-ounce price settled at $1,997 after a significant increase of $58.

    The longer-term prospects for gold remain positive due to expectations of a pause in US interest rate hikes. In addition, silver prices in the domestic market rose by Rs20 per tola and Rs17.15 per 10 grammes, settling at Rs2,220 per tola and Rs1,903.29 per 10 grammes, respectively.