A recent poll by Topline Research surveyed market participants on their views and macro estimates for the upcoming Monetary Policy announcement on March 2, 2023.
The results showed that the majority of the market expects a policy rate increase of 200-300 basis points (bps) while only 1 percent expect no change.
As per the survey, the majority of the participants (87 percent) expect the policy rate to increase by 200-300 bps. Out of these, 64 percent expect a 200 bps increase, and 23 percent are eyeing a 300 bps increase. Out of the remaining participants, 7 percent expect a 100 bps increase, whereas 4 percent are eyeing an above 300 bps increase. Meanwhile, only 1 percent of the survey participants expect no change.
Inflation
In response to the question on average inflation expectations for FY23, 38 percent of the total participants believe that inflation is likely to average above 30 percent. On other hand, 29 percent and 23 percent of the participants expect inflation of 28-30 percent and 26-28 percent, respectively. The remaining 10 percent of the participants expect inflation to average 22-26 percent.
Responding to the question on where they see the Policy Rate by end of December 2023, 40 percent of the participants anticipate the policy rate to remain in the range of 19-21 percent while 21 percent expect it to be at 15-17 percent and 19 percent expect it to be 17-19 percent. On other hand, 3 percent expect it to be below 15 percent.
To highlight, since the last MPC meeting held on January 23, 2023, secondary market rates including T-Bill/Kibor rates have gone up by around 200 bps.
CPI inflation has also increased to 27.6 percent in January 2023 as compared to 24.5 percent in December 2022. Urban core inflation (Non-Food, Non-Energy) stood at 15.4 percent in January 2023 versus 14.7 percent in December 2022. Rural Core Inflation increased to 19.4 percent in January 2023 versus 19.0 percent in December 2022. February 2023 CPI is likely to be 30-31 percent.
Source: Pro Pakistani