wednesday, 15 december, 2021 I 10 Jamadi-al-awwal, 1443 I rs 15.00 I Vol XII No 167 I 12 Pages I Islamabad Edition
100 bps hike brings policy rate to 9.75pc g
Hike to counter inflationar y pressures and ensure sustainable growth kARACHI
t
aRiba Shahid
HE State Bank of Pakistan (SBP) announced a 100 bps hike in the policy rate in conclusion to today’s Monetatry Policy Committee (MPC) meeting. The hike aims to “counter inflationary pressures’ ‘ and “ensure growth that remains sustainable”. While the term forward guidance has not been used in the statement, the MPC has said, “Following today’s rate increase and given the current outlook for the economy, and in particular for inflation and the current account, the MPC felt that the end goal of mildly positive real interest rates on a forward-looking basis was now close to being achieved. Looking ahead, the MPC expects monetary policy settings to remain broadly unchanged in the near-term.” Tahir Abbas, Head of Research at Arif Habib Limited says, “The most important elemant is the forward guidance by the SBP in which MPC felt that the end goal of mildly positive interest rates on forward looking basis has almost been
crease whereas, Dawood Equities estimated a 200 bps increase. Only 4 of the 47 surveyed estimated a hike of less than 100 bps which shows the market anticipated a somewhat aggressive hike. This is important considering the speculation and haphazard way in which money, debt, and capital markets have been operating over the uncertainty regarding the policy rate. The MPC has called the uncertainty and reaction of market players as “unwarranted”. The statement reads, “across all tenors, secondary market yields, benchmark rates and cut-off rates in the government’s auctions have risen significantly. The MPC noted that this increase appeared unwarranted.” Thus, the forward guidance provided remains important keeping market sentiments in mind. “In my view, the forward guidance will reduce uncertainty in the money market,” says Samiullah Tariq, Head of Research at Pak Kuwait Investment Company. It is interesting to note that the Finance Minister also had a dressing down for banks for their greed and went
achieved and the monetary policy is expected to broadly remain unchanged in the near term.” Earlier last month, in an exclusive interview with Profit, Governor SBP, Reza Baqir explained, “In terms of the stance of monetary policy has not been tightened, just the pace at which you want to reach that in our view is faster. The reason it should be faster is because the rotation of balance of risks from growth to inflation and the current account has been a bit faster than anticipated. Now that message has information that is positive and also contains information, which has prompted us to the fact that growth continues to be robust. Even with this policy action, we expect growth to 5% this fiscal year.” The frequency of MPC meetings has increased because “the two month period proved to be quite long when the world is changing rapidly,” said the governor. MarkEt EXPECtatIONs: As per the Bloomberg MPC survey, the median estimate was 9.75% in line with the SBP’s decision. Standard Chartered Bank and Ismail Iqbal Securities estimated a 50 bps in-
Govt urges ECP to expedite work on EVMs
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elections only via EVM” The minister revealed that roughly Rs27 billion rupees would be required for holding the next general elections, saying 400,000 machines with 800,000 voting pads would be enough to hold the provincial and national assembly elections in 2023. Keeping roughly 400,000 polling booths in the country in view, he had said, the ECP says that 800,000 EVMs would be needed to hold the next general elections. In this regard, the cabinet welcomed the ECP’s decision to use EVMs in the local body elections in Islamabad, on Tuesday. Later, while replying to a question, the minister said that obtaining 4,000 machines was not a problem for ECP as it would get the machines as soon as it issues a tender. Gwadar PrOtEsts: On the issue of Gwadar protests, the minister stated that “the issue of Gwadar protest also came into discussion during the cabinet meeting. On the directives of the Prime Minister, the two ministers will visit Gwadar and will address the grievances of the people of the coastal city” He said that PM Khan had already taken notice of the matter and the demands of protesters were being considered with seriousness.
With the intensification of competition between established and emerging powers, that has made world peace fragile and the direction of diplomacy unpredictable, Pakistan has made a strategic pivot from geopolitics to geoeconomics, Foreign Minister Shah Mahmood Qureshi said Tuesday. “From now on, our foreign policy will emphasise geoeconomics,” he said while speaking at the Margalla Dialogue 2021 organised by the Islamabad Policy Research Institute (IPRI). Decades of bartering Pakistan’s geostrategic value — including as a front-line state in the Cold War and the War on Terror after the deadly 9/11 attacks — has contributed to the loss of countless lives, stifled development, and turned the country into a heavily indebted security state. Geoeconomics, the officialdom argues, would flip that script. Recent speeches of top officials in both civil and military spheres offer a “geo-economic vision” that centres on regional integration and the collective pursuit of sustainable development in an environment of peace and stability. In his rather candid address, the foreign minister spoke at length on various issues including Islamabad’s foreign policy, the humanitarian situation in Afghanistan, ties with China, the United States, Russia and India as well as the importance of resolution of Kashmir dispute for lasting peace.
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LAST UPDATED AT 9:56 AM ON NOV 14, 2021
DAY'S DEATH TOLL:
3
NEW CASES:
250
SINDH:
PUNJAB:
ISLAMABAD:
478,173
443,937
108,146
KP:
BALOCHISTAN:
AJK/GB:
33,536
34,615/10,426
DEATHS: 28,839 180,710
Qureshi says Pakistan’s relations with China are resilient and poised to grow further ISLAMABAD
1,289,543 pakistan
1,251,584
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Staff RepoRt
CONFIRMED CASES: coronavirus in RECOVERED:
would be strung along by banks. “The increase was expected and despite growing pressure on the SBP to go easy, the language of the MPC indicates that more hikes are around the coner,” says Uzair Younus, Director of the Pakistan Initiative at the Atlantic Council. Another comment on the langauage of the statement comes in from Ammar Habib Khan, Economist who sarcastically comments, “Mildly amused and amusement on a forward looking basis is expected to remain broadly unchanged in near term.”
Pakistan has pivoted from geopolitics to geoeconomics: Qureshi
NewS DeSk Federal Minister for Information and Broadcasting Fawad Chaudhry urged the ECP to issue tender for the EVMs, on Tuesday. The minister stated that the government is ready to provide Electronic Voting Machines (EVMs) to the Election Commission of Pakistan (ECP). While briefing the media on the federal cabinet meeting, chaired by PM Imran Khan, he stated that the ECP should issue a tender carrying all the requirements and conditions needed for holding the next general elections through EVMs. The minister then recalled that the talk about holding elections via EVM first started in 2012 under PPP’s government and, subsequently, the PML-N government directed ECP in 2017 to take practical steps for making it a reality. He said that PTI was taking the world already done by PPP and PML-N forward, adding all the political parties should play a positive role in this regard. Fawad Ch, while referring to the correspondence between the ECP and the ministry of science and technology, stated that the government has informed the electoral body that the demonstration of the developed prototype of EVM was given to the commission on April 17 and later to the secretary ECP on November 15. “To our understanding, ECP has approved the machines and the science ministry is ready to supply the machines,” he added. It is pertinent to note that the Cabinet was given a detailed briefing on the schedule regarding delivery and use of EVMs at all polling stations in the country and training of staff. The cabinet expressed its firm resolve to hold the next elections through EVMs after the implementation of laws regarding electronic voting machines and voting rights to overseas Pakistanis. In this regard, Chaudhry stated that “if the elections are not held through EVMs then the government would not be able to release funds to ECP because the law permits holding
live on television to say, “We’re speaking to the banks tomorrow. We’re going to explain to them that they shouldn’t do such antics.” If you’re interested to know what the antics are, give this a read. The 3 month treasury bill is 200 bps higher than the policy rate. As a result, on the Dec 1 T bill auction, the government raised Rs 500 bn at a much higher rate than their previous acution where the government accepted much lower bids. This showed that the market was expecting the policy rate to go higher much faster which put the SBP’s accomodative stance into question and whether it
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