KARACHI: In a bid to counter inflationary pressures and to ensure that growth remains sustainable, the State Bank of Pakistan (SBP) on Tuesday announced an increase of 100 basis points in the benchmark policy rate, taking it to 9.75%.
In a statement, the central bank said, "Given rate increases since September and outlook, the Monetary Policy Committee felt that the end goal of mildly positive real interest rates on a forward-looking basis was now close to being achieved."
Hinting towards the next MPC scheduled to be held on January 24, the SBP said that looking ahead, monetary policy settings are expected to remain broadly unchanged in the near-term."
The Monetary Policy Committee (MPC) met today for the first time after Pakistan reached a staff-level agreement with the International Monetary Fund (IMF) under the sixth review on November 22, 2021.
Today’s meeting was one of the two additional meetings that the central bank had scheduled last month when it jacked up its benchmark policy rate by 150 basis points to 8.75%, largely in line with the market expectation, because of risks related to inflation.
According to a post-meeting statement issued by the central bank: "Looking ahead, based on this momentum and the expected path of energy tariffs, inflation is likely to remain within the revised forecast range for the remainder of the fiscal year."
"Subsequently, as global commodity prices retrench, administered price increases dissipate, and the impact of demand-moderating policies materialises, inflation is expected to decline toward the medium-term target range of 5-7% during FY23," the statement said.
"The MPC will continue to carefully monitor developments affecting medium-term prospects for inflation, financial stability, and growth," the central bank added.
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