Pakistan central bank keeps rates steady at 22%
The State Bank of Pakistan (SBP) announced on Monday that the Monetary Policy Committee (MPC) decided to keep the policy rate unchanged at 22 per cent, due to “elevated” inflation which reached 29.7 per cent in December.
The MPC expects average inflation to fall in the range of 23 – 25 per cent in the financial year 2024 and continue to trend down noticeably in the financial year 2025, it noted in a statement.
“While arriving at the decision, the Committee observed that the frequent and sizeable adjustments in administered energy prices have slowed down the pace of decline in inflation anticipated earlier, besides impeding a sustained decrease in inflation expectations.” the MPC statement explained.
The Committee noted that the projection of current account deficit for the financial year 2024 remains unchanged in the range of 0.5 to 1.5 per cent of GDP, despite the modest economic recovery and elevated level of profit.
The decision to maintain the key policy rate — for the fifth time in a row — is the last under the caretaker government before the country’s general election next month. It also comes in the midst of Pakistan’s $3 billion Standby Arrangement (SBA) with the International Monetary Fund (IMF).
The Committee also said it “viewed that the real interest rate remained significantly positive on 12-month forward looking basis, as inflation is expected to remain on a downward path.”
