KARACHI: The State Bank of Pakistan (SBP) on Monday decided to keep the interest rate unchanged at 22 per cent for next 45 days.
The announcement was made by State Bank of Pakistan Governor Jameel Ahmed after a meeting of the bank’s Monetary Policy Committee (MPC) today. The MPC noted that the monthly inflation in Pakistan was recorded at 23.1pc in February from 28.3pc. Pakistan was urged to continue strict monetary policy by the International Monetary Fund.
The MPC noted that while energy inflation also decelerated on y/y basis in February, the adjustments in administered energy prices have continued to contribute to inflation directly and indirectly.
This has implications for the needed sustained decline in inflation expectations of both consumers and businesses. Going forward, any further adjustments in administered prices or fiscal measures that may push prices up pose risk to the nearand medium-term inflation outlook. Cognizant of these risks, the Committee assessed that it is prudent to continue with the current monetary policy stance at this stage.
In its previous meeting on December 12, the MPC of the SBP had also kept the key policy rate unchanged at 22%, which was in line with market expectations.
Back then, the MPC reiterated “that the real interest rate continues to be positive on a 12-month forward-looking basis and inflation is expected to remain on a downward path.”