Macroeconomic Forecast Pakistan

July 2004 | Macroeconomic Forecasts

BMI View: Pressure is mounting on the State Bank of Pakistan, the central bank, to raise interest rates at its upcoming policy meeting in a bid to rein in inflation. In June, the consumer price index rose by 8.5% y-o-y as the cost of food and beverages, the most heavily weighted component of the CPI basket, spiked by a double-digit 13.7%. The bank, which is due to release its next monetary policy statement on July 20, has so far resisted pressure to raise borrowing costs. It says that core inflation, which excludes movements in food and energy prices, remains stable. The bank has cut the key discount rate by a total of 6.5 percentage points during the past three years to a life low of 7.50%.

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