State Bank of Pakistan maintains interest rate at 5.75%

KARACHI: State Bank of Pakistan held its main policy interest rate steady at 5.75 percent on Saturday, the bank's new governor said, citing low inflation expectations and the gathering pace of economic activity.

Tariq Bajwa, who was appointed earlier this month, said the economy was in an "expansionary phase" and added the balance of payments issues that have dogged Pakistan in the past will be kept under control.

The SBP Governor said the national economy was undergoing expansion given the rise in fiscal activity. He added the service sector has grown by 6%, while there has been a significant improvement on the construction front.

However, the rate of inflation is expected to rise to 5.5% from 4.5%.

The announcement has been made after a meeting of SBP's Monetary Policy Committee members.  During the meeting, the committee had discussed there was no margin left to lower the interest rate.

The interest rate has been at 5.75% since 2016.