The State Bank of Pakistan (SBP) on Monday decided to keep the policy rate unchanged at 22 per cent for the seventh consecutive session, VOS News reported.
The announcement came after a meeting of the bank’s Monetary Policy Committee (MPC).
In a statement, the MPC said stressed on continuation of the current monetary policy stance to bring inflation down to the target range of 5 – 7 per cent by September 2025.
“The macroeconomic stabilisation measures are contributing to considerable improvement in both inflation and external position, amidst moderate economic recovery,” it stated. However, the committee viewed that the level of inflation is still high.
“At the same time, global commodity prices appear to have bottomed out with resilient global growth. The recent geopolitical events have also added uncertainty about their outlook. Moreover, the upcoming budgetary measures may have implications for the near-term inflation outlook,” the statement noted.
Last month, the committee had maintained the status quo by upholding the key policy rate at 22 per cent.
‘Current account recorded surplus’
The monetary policy committee, in its statement today, noted that data for the first half of fiscal year 2024 suggested that economic activity is recovering at a moderate pace, led by strong rebound in agriculture sector.
Moreover, the current account recorded a sizable surplus in March 2024, which helped to stabilise the SBP’s foreign exchange reserves despite substantial debt repayments and weak financial inflows, as per the communique.
“Third, inflation expectations of consumers inched up in April 2024, whereas those for businesses declined. And lastly, leading central banks particularly in advanced economies have adopted cautious policy stance after noticing some slowdown in the pace of disinflation in recent months.”
