IGI Securities Limited – Day Break (19-09-2019)

Karachi, September 17, 2019 (PPI-OT): Economy – Monetary Policy: Staying Cautious Policy Rate Kept Unchanged for Now; Future Rate Guidance Dependent On Fiscal Performance and Oil Prices

In latest Monetary Policy Committee (MPC) meeting held on 16th Sep, 2019 the MPC left the policy rate unchanged at 13.25%.

Nevertheless, the motivation behind the current decision is rather precautionary in nature, which comes despite mild improvements witnessed in general economic indicators. In addition to this SBP inflation projections remain relatively unchanged at 11-12% despite rebased and changed methodology in CPI index.

On inflation outlook we expect it to average close to +10% against SBP target of 11-12% and IMF 13% and are of the view that SBP is likely to keep policy rate unchanged at 13.25% for remainder of 2019 (monetary policy statement announcement due November) and see monetary rate cycle reversal starting Jan-20 onwards.

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