Pakistan’s c. bank holds rate steady at 22%

Pakistan’s central bank maintained its key interest rate at 22 per cent for the sixth consecutive policy meeting due to ongoing inflation risks, its monetary policy committee announced in a statement on Monday.

The State Bank of Pakistan (SBP) emphasised the need for a cautious approach to bring inflation down to the target range of 5–7 per cent by September 2025.

At its meeting today, the Monetary Policy Committee (MPC) decided to keep the policy rate unchanged at 22 percent. In approaching today’s decision, the Committee noted that inflation, in line with earlier expectations, has begun to decline noticeably from H2-FY24. The Committee, however, observed that despite the sharp deceleration in February, the level of inflation remains high and its outlook is susceptible to risks amidst elevated inflation expectations. This warrants a cautious approach and requires continuity of the current monetary stance to bring inflation down to the target range of 5 – 7 per cent by September 2025.”

Analysts had anticipated this decision to Retuers, with expectations of rate cuts in the second quarter of the year. Despite a slight easing of inflation in February, the rate remains high and poses risks.

This decision comes ahead of the April expiry of a $3 billion Standby Arrangement with the International Monetary Fund (IMF), with the last rate hike occurring in June to address inflationary pressures and meet IMF conditions.

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