SBP denies holding emergency MPC meeting amid economic uncertainty

The State Bank of Pakistan (SBP) on Friday rejected the reports of holding an emergency meeting of the Monetary Policy Committee (MPC) amid the continuing decline in the value of the local currency against the US dollar.

“The reports making rounds in media about holding of an emergency meeting of the Monetary Policy Committee (MPC) of SBP are completely baseless," the central bank said in a statement.

The statement comes as the local currency fell to Rs305.54 after shedding Rs1.09 in interbank on Thursday while the greenback is changing hands in the open market price at over Rs320.

Moreover, the Pakistan Stock Exchange (PSX) on Thursday witnessed bloodbath as the benchmark index tanked over 2% amid fears over the worsening economic condition of the country.

Investors reacted with panic to the rising rupee-dollar parity, opting to offload shares on fears of a looming economic turmoil.

As the uncertainty took its toll on the economy, it was being speculated that the SBP would hold an emergency MPC meeting to review key policy rate in a bid to stop the decline in local currency.

Reacting to the reports, the SBP said it would be premature to forecast the future policy rate as only the MPC, which is an independent statutory body, is empowered to decide about the policy rate.

“The next meeting of the MPC is scheduled to be held on September 14, 2023, during which it will take stock of the economic developments and take appropriate decision in the matter,” the statement added.

On July 31, the SBP left its key rate on hold at 22% and expressed the optimism that inflation would drop gradually in the months to come.

The SBP decided to maintain the status quo in the policy rate, which surprised many because the International Monetary Fund had called for further tightening to ease price pressures.