SBP decides not to increase interest rate
State bank keeps key policy rate unchanged at 22%
The State Bank of Pakistan (SBP) has decided not to increase the interest rate!
On Monday, the State Bank of Pakistan (SBP) announced the decision to maintain the key policy rate at 22% against market expectations as the analysts were expecting an increase in the interest on International Monetary Fund (IMF) guidelines.
The decision was announced by SBP Governor Jameel Ahmed following the Monetary Policy Committee (MPC) meeting in a press conference.
The SBP governor said the growth rate is expected to remain between 2% to 3% over the next year.
“In view of the decline in inflation, the SBP decided not to increase the interest rate,” he added.
He said the government has lifted all restrictions on imports and the country’s foreign exchange reserves increased by $4.2 billion in July after Pakistan received funds from International Monetary Fund (IMF) and other friendly countries.
The Monetary Policy Committee (MPC) decided to maintain the policy rate at 22 percent in its meeting today.
— SBP (@StateBank_Pak) July 31, 2023
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The MPC in a statement said that it expected domestic demand to remain subdued amid tight monetary stance, domestic uncertainty, and continuing stress on the external accounts.
“The MPC noted that higher inflation outturns for April and May were broadly as anticipated. The Committee also noted sequential ease in inflation expectations of both consumers and businesses from their recent peaks,” it stated.
The committee viewed the national inflation to have peaked at 38% in May 2023.
“The Consumer Price Index inflation rose to 38% in May 2023, pushing the average inflation to 29.2% during July-May of the fiscal year 2023, compared to 11.3% in the same period last year,” it said.
