The State Bank of Pakistan (SBP) decided to keep the key policy rate unchanged at 22 percent, as announced by SBP Governor Jameel Ahmed after a meeting of the bank’s Monetary Policy Committee (MPC).
1/4 The Monetary Policy Committee (MPC) decided to maintain the policy rate at 22 percent in its meeting today.https://t.co/Jo3dUKwmcQ#SBPMonetaryPolicy pic.twitter.com/zBcFAS4Xoa
— SBP (@StateBank_Pak) July 31, 2023
This decision was influenced by factors such as a moderate growth outlook for the fiscal year, addressing short-term external sector vulnerabilities following the International Monetary Fund’s stand-by agreement (SBA), and the impact of previous monetary tightening.
The SBP had raised rates earlier to control soaring inflation, and it highlighted the increase in foreign exchange reserves due to disbursements under the SBA and bilateral support.
The central bank aims to maintain a tight monetary policy stance with positive real interest rates to achieve its medium-term inflation target of 5-7% by the end of FY25.
The press release also mentioned that the current account deficit is expected to remain contained, and inflation is projected to decrease due to various factors, but it remains subject to risks from domestic and external shocks.
The MPC will closely monitor developments and adjust the monetary policy stance if necessary to achieve price stability.
