The State Bank of Pakistan (SBP) on Monday increased the yardstick policy rate by 150 basis points to 13.75% for the coming six weeks to uphold the equilibrium between inflation and economic growth.
The central bank said that this move was crucial to secure inflation expectations and continue external stability.
The central bank in its monetary policy statement said that the move paired with fiscal consolidation, should aid moderate demand to better sustainable pace.
The Monetary Policy Committee (MPC) convened today for the first time being led by acting governor Dr. Murtaza Syed to make decisions related to the key benchmark interest rate.
The central bank has cumulatively hiked up the rate by 675 basis points since September 2021 to rein in inflation and close the current account deficit.
The SBP said that the rates would be connected to the policy rate and will adjust on their own. It said that they will remain below the policy rate to incentivize exports. The central bank added that the MPC will carry on careful monitoring of developments that affect medium-term prospects for inflation, stability and growth.