MPC: Analysts expect hold on interest rate despite inflationary pressures

At a time when fresh headwinds have emerged over the health of the global economy and build-up in domestic inflationary pressures, the Monetary Policy Committee (MPC) is expected to hold its second meeting of the year from March 21 to 22, 2022. The committee will examine the global economy’s health within the context of withdrawal […]

At a time when fresh headwinds have emerged over the health of the global economy and build-up in domestic inflationary pressures, the Monetary Policy Committee (MPC) is expected to hold its second meeting of the year from March 21 to 22, 2022.

The committee will examine the global economy’s health within the context of withdrawal of monetary stimuli by central banks amid the ongoing spat between Russia and Ukraine.

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On the domestic front, short-term inflation expectations will likely discomfort committee members, particularly given the pass-through impact of elevated global energy prices on headline inflation.

Analysts at Cordros Research are of the opinion that the committee will likely lean towards an accommodative monetary policy stance predicated on the need to fully realise gains from previous policy actions geared towards boosting economic recovery.

They said, “We do not expect the committee to hike interest rates in response to the hawkish monetary policy currently adopted by global central banks.”

The analysts expect the committee to express concerns about the pass-through impact of the lingering Russia-Ukraine conflict on domestic prices, particularly as diesel price continues to soar.