Dear Clients,
The current stance of status quo marks more than a year since SBP has kept policy rate at 7% as it plans to continue supporting recovery as good news continue to emerge on growth, inflation and external side amid resurgence of COVID19 wave.
High-frequency indicators show robust growth with a few showing seasonal deceleration, business and consumer sentiment continues to improve and output gap may likely tag as we tread along FY22.
While the fourth COVID19 makes SBP subservient to maintain rates, the authority has flagged that there might be a need to begin normalization of policy rate as demand-side pressures mount on inflation or vulnerabilities emerge on the external front, especially with regards to the Current Account Deficit (CAD).
Regards,
KASB Research
