Financial market punters expect no change in key policy rate

KARACHI: The financial market participants are expecting no change in the key policy rate in the upcoming monetary policy statement, scheduled for July 27, 2021.

In this regard, Topline Research conducted a poll of key financial market participants on the expectations over the monetary policy statement.

A total of 62 participants took part in the latest poll, compared with 78 in the May 2021 poll, which was conducted for the monetary policy statement of May 2021, according to a report issued by the Topline Research.

The poll is expecting no change in the policy rate in the July 2021 monetary policy statement; however, it shows expectations of an increase in the policy rate during the second half of 2021.

In its last monetary policy statement on May 28, 2021, the State Bank of Pakistan (SBP) had maintained the policy rate at 7 per cent.

The Topline Research said around 89 per cent of the participants are expecting no change in the policy rate in the upcoming monetary policy statement, compared with 73 per cent in the previous poll.

Around 7 per cent of the participants expect an increase of 25 basis points in the policy rate, while 4 per cent of the participants anticipate an increase of 50 basis points.

According to the poll, none of the participants expected a cut in the policy rate, compared with 12 per cent of the participants, which were expecting a reduction in the previous poll.

In total, 64 per cent of the participants expect an increase in the policy rate in 2021.

Around 51 per cent of the participants are expecting an increase in the policy rate by 50 basis points during 2021, while 13 per cent of the participants are expecting a rise of 100 basis points during the year.

The majority of the participants, i.e., around 57 per cent expect the rupee/dollar between 160 and 165 by the end of 2021, while 37 per cent expect the rupee/dollar to be between 165 and 170.