KARACHI: The State Bank of Pakistan (SBP) on Tuesday left the benchmark interest rate unchanged at 9.75% for the next six weeks as the outlook for inflation has improved.
“This decision reflected the Monetary Policy Committee’s (MPC) view that the outlook for inflation has improved following the cuts in fuel prices and electricity tariffs announced last week as part of the government’s relief package,” the central bank said in a statement released the meeting.
It further added that high-frequency indicators suggest that growth continues to moderate to a more sustainable pace.
“This moderation should help keep at bay demand-side pressures on inflation and contain non-oil imports, notwithstanding the significant uncertainty about the future path of global energy and food prices due to the Russia-Ukraine conflict,” the statement read.
Today’s Monetary Policy Committee (MPC) meeting was the first after the start of the Ukraine-Russia conflict which is posing a threat to the national economy and affecting the stock market.
The interest rate and flexible rupee-dollar parity are the two major tools available with central banks all over the world to control inflation reading and give a direction to the economic trajectory in their respective countries
It was the third consecutive monetary policy statement (MPS) in which the central bank maintained the policy rate to support recovery in economic activities despite a higher inflation reading and the recent depreciation of the rupee.
