The State Bank of Pakistan (SBP) Monday chose to maintain the status quo by upholding the key policy rate at 22 per cent for the sixth policy meeting in a row.
The decision was the first under the newly elected government. It also comes ahead of the International Monetary Fund (IMF)’s last review due on March 14 -18 for the $1.1 billion disbursement under the current Stand-By Arrangement (SBA).
In a statement, the SBP said the central bank’s Monetary Policy Committee (MPC) had met earlier today and reviewed the current economic developments.
Regarding the decision to maintain the status quo, the committee noted that although inflation had declined noticeably, it still remained “high and its outlook is susceptible to risks amidst elevated inflation expectations”.
On a positive note, the MPC highlighted that latest data continued to depict moderate pick-up in economic activity.
It said that the better than anticipated external current account balance helped maintain foreign exchange buffers despite weak financial inflows.
On the global front, it observed that “while the broader trend in commodity prices remained benign, oil prices have increased, partly reflecting the continued tense situation in the Red Sea”.
“These circumstances warrant a cautious approach and continuity of the current monetary stance to bring inflation down to the target range of 5 –7pc by September 2025,” the statement said.