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Wednesday, March 29, 2023

SBP reveals first-ever advance calendar for MPC meetings

The advance calendar according to the statement would allow for an increase in transparency while decreasing the uncertainty surrounding the monetary policy decision making.

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Taking another step towards making the process of monetary policy formulation more predictable and transparent, the State Bank of Pakistan (SBP) has decided to begin announcing a half-yearly schedule of Monetary Policy Committee (MPC) meetings on a rolling basis.

Keeping this in mind, the dates for the next four meetings are mentioned in the recently released statement as follows:

  1. May MPC meeting: Friday, 28th May 2021
  2. July MPC meeting: Tuesday, 27th July 2021
  3. September MPC meeting: Monday, 20th September 2021
  4. November MPC meeting: Friday, 26th November 2021

The statement by the SBP mentions that there would be at least six meetings of the MPC scheduled around the year. However, other than that the MPC can convene an emergency meeting at any point during the intervening period as required.

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The statement says that “In taking this step, SBP is following international best practices. To manage the expectations of economic agents, many central banks across the globe release the schedule of Monetary Policy Committee (MPC) meetings in advance. This practice is consistent with the objective of reducing uncertainty around monetary policy decision-making.”

This means that now people wouldn’t be always taken by surprise as a monetary policy decision is taken, for example, the revision of interest rates, or the government’s decision to increase or decrease the money supply as required by the economy at the time.

This kind of clear communication helps to make central banks more transparent and thereby contributes to enhancing their accountability. Central bank communication and transparency are also key for the effective transmission of monetary policy decisions.

In this context, the State Bank of Pakistan has over the years been seeking to modernize and increase transparency in the monetary policy-making process, in line with international best practices.

The Statement then goes on to identify some of the initiatives taken by the SBP in the past.

To quote the latest two that happened during the current regime’s time include the first one in 2020, where to make monetary policy communication more effective, SBP enhanced interactions with analysts, the media, various business forums, academics, and investors through regular briefing sessions with its senior management.

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Latest in January 2021, in light of the extreme uncertainty caused by the Covid pandemic, the MPC of the State Bank of Pakistan decided to provide forward guidance on monetary policy for the first time to facilitate policy predictability and decision-making by economic agents.