20% Chance of policy rate hike

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A research firm yesterday gave a 20:80 chance for a policy rate increase at today’s Monetary Board meeting.

First Capital Research, in a statement said, “We believe that there is a major probability of an 80 per cent chance of maintaining rates at current levels. However, there is also a lower probability of a 20 per cent for tightening to compensate for higher inflation and to comply with IMF conditions.

 As per 2021 article IV consultation of IMF, tighter monetary policy was a key recommendation as part of the comprehensive strategy and therefore, given the higher inflationary environment of 60.8 per cent which is significantly above e interest rates and to compensate for squeezed real income, there is a probability, although at a lower scale, to further tighten policy rates at the upcoming meeting.” 

(PA)