Inflation, current account deficit increased: SBP

Says investment to increase; keeps policy rate unchanged at 5.75pc

KARACHI: The State Bank of Pakistan (SBP) on Saturday kept its benchmark interest rate unchanged at 5.75 percent in line with the market expectations to lend support to economic activities. 

“The upbeat economic sentiments and low interest rates have encouraged the private sector to undertake capacity expansions,” the SBP said in the monetary policy announcement for the next two months (June-July).  

“The major thrust has come from the ongoing public and private investment particularly in infrastructure and power sector,” it added. The central bank, however, said headline consumer price index (CPI) inflation edged up in the recent months following further improvement in economic activity along with pass through of the recovering global oil prices to domestic motor fuel cost. 

“Going forward in FY18, current trends of rising income, surge in imports, and accelerating credit to private sector are expected to increase the CPI inflation; however, it is likely to remain within the target,” it said.

The current account deficit has widened during Jul-Apr FY17 compared to the same period last year.