UPDATE 1-Pakistan central bank brings forward monetary policy decision

  • 11/16/2021
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(Adds context on weakening rupee, economic outlook, previous decision, adds analyst comment) ISLAMABAD, Nov 16 (Reuters) - Pakistan’s central bank said on Tuesday it was bringing forward its next monetary policy decision to Friday due to “unforeseen developments” affecting the outlook for inflation. The central bank did not specify what developments it was focused on, but analysts pointed to growing questions around the impact an IMF review could have on the economy and policy. “The meeting has been brought forward in light of recent unforeseen developments that have affected the outlook for inflation and the balance of payments, and to help reduce the uncertainty about monetary settings prevailing in the market,” the State Bank of Pakistan said in a statement. The bank had been scheduled to make its next monetary policy announcement a week later on Nov. 26. “They are saying to reduce uncertainty...there is lot of speculation going on regarding an increase in rates due to the IMF programme,” said Mohammed Sohail, chief executive of Topline Securities Ltd. “So it looks like they want to clear this speculation and also maybe they want to give a signal to the IMF.” Pakistan has been in talks with the IMF in recent months to secure a $1 billion funding tranche, but its sixth review remained inconclusive. The concerns around the IMF review have also been partly blamed for a slide in the rupee in recent weeks, adding pressure on an economy struggling with high inflation and a current account deficit. At its meeting in September, the State Bank raised its benchmark interest rate by 25 basis points to 7.25%, the first move it had made since slashing borrowing costs last year, and signalled it could lift rates further in future. (Reporting by Charlotte Greenfield; Editing by Andrew Heavens and Alex Richardson)

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