ISLAMABAD: State Bank of Pakistan on Monday is announcing a new monetary policy has increased the key interest rate by 150 basis points to 12.25 per cent.
The decision was made in the meeting of Monetary Policy Committee in Karachi today, the central bank said the new rate will be in effect from tomorrow.
It said that economic growth is expected to slow in the current financial year but rise modestly in the next.
This slowdown is mostly due to lower growth in agriculture and industry.
Some gradual recovery in economic activity is expected on the back of improved market sentiment in the context of the IMF supported program, a rebound in the agriculture sector and government incentives for export-oriented industries.
The statement noted that the current account deficit narrowed to 9.6 billion dollars in Jul-Mar FY19 as compared to a deficit of 13.6 billion dollars during the same period last year, a fall of 29 per cent.
The Central Bank will continue to closely monitor the situation and stands ready to take measures, as needed, to address any unwarranted volatility in the foreign exchange market.
The bank said that the overall fiscal deficit is likely to be considerably higher during Jul-Mar FY19 as compared to the same period last year due to a shortfall in revenue collection, higher than budgeted interest payments and security-related expenditures.
The Central Bank said average headline CPI inflation is expected to be in the range of 6.5-7.5 per cent this financial year and it is anticipated to be considerably higher in the next financial year.