Majority participants expect no change in key policy rate

KARACHI: A survey conducted by a research house revealed that the majority of the participants believe no change in key policy rate in the upcoming monetary policy announcement scheduled on September 20, 2021.

Topline Research conducted a poll of key financial market participants on the expectations over the upcoming monetary policy announcement. At present, the policy rate is at 7 per cent.

Around 65 per cent of the poll participants are expecting no change in the policy rate in the upcoming monetary policy statement, compared with 89 per cent in the previous poll, while around 25 per cent participants believe an increase of 25 basis points in the key policy rate.

Likewise, 10 per cent of the participants anticipate an increase of 50 basis points or above. However, none of the participants expect a cut in the policy rate.

A total of 68 participants took part in the latest poll, compared with 62 in July 2021 poll, which was conducted for the July 2021 monetary policy statement.

Analysts at Topline Securities expect a 25 basis points increase in the policy rate in September 2021, given the recent vulnerabilities in the current account, higher-than-expected Sensitive Price indicator (SPI) readings, suggesting no let down in the Consumer Price Index (CPI) inflation and start of discussions with the International Monetary Fund (IMF) on resumption of the programme.

In total, 54 per cent of the participants expect an increase in the policy rate in 2021. Around 44 per cent of the participants are expecting an increase in the policy rate by 50 basis points during 2021, while 10 per cent of the participants are expecting a rise of 100 basis points or above during the year.

A majority of the participants (57 per cent) expect the rupee/dollar between 165 and 170 by the end of 2021, while 39 per cent expect the rupee/dollar to remain between 170 and 175.