State Bank keeps interest rate unchanged at 13.25%

KARACHI: Pakistan’s central bank on Tuesday kept its key policy rate unchanged at 13.25 percent, saying inflationary pressures were keeping it from lowering the interest rate.

State Bank Governor Reza Baqir  said that when the monetary policy committee decided the interest rate in July, inflation stood at 8.4 percent.

"A few months after that, inflation rate kept on increasing. It [inflation rate] kept on increasing after that. Most recently, it stood at 12.4 percent," he said.

He said inflation had risen due to increase in food prices and hike in utility bills, but that the government's economic team was of the opinion that inflation would decline in the long run to around five to six percent.

He said inflation expectations were "stable and constant", but said it was difficult to predict when it would begin to dip. "We know that in the long run, inflation will decline," he said.