In a decision maintaining a course of continuity, the State Bank of Pakistan (SBP) announced on Monday the retention of the policy rate at 22% for the seventh consecutive time. The decision emerged from the Monetary Policy Committee (MPC) meeting held today.
Despite signs of macroeconomic stabilization and a modest economic rebound, the committee underscored persistent concerns over inflationary pressures and global economic uncertainties.
“The MPC viewed that the level of inflation is still high. At the same time, global commodity prices appear to have bottomed out with resilient global growth. The recent geopolitical events have also added uncertainty about their outlook. Moreover, the upcoming budgetary measures may have implications for the near-term inflation outlook,” read a statement issued post the MPC meeting.
The committee emphasized the continuation of the prevailing monetary policy stance to curb inflation, aiming to bring it down to the target range of 5 – 7 percent by September 2025.
Key developments highlighted by the MPC since its last meeting include a moderate economic recovery in the first half of FY24, primarily driven by a robust resurgence in the agriculture sector. Additionally, the current account surplus recorded in March 2024 supported the stabilization of the SBP’s foreign exchange reserves, despite substantial debt repayments and weak financial inflows.
Moreover, while consumer inflation expectations saw a slight uptick in April 2024, business inflation expectations witnessed a decline. The MPC also noted cautious policy stances adopted by leading central banks, particularly in advanced economies, following a slowdown in the pace of disinflation in recent months.
The decision to maintain the policy rate underscores the SBP’s commitment to navigating the complex economic landscape and achieving sustainable macroeconomic stability in Pakistan.
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