ISLAMABAD
State Bank of Pakistan (SBP) has decided to maintain the policy rate at 9.75 percent, in line with the forward guidance provided in the last monetary policy statement.
“At that time, the MPC had considered the measures taken to lower inflation and keep the ongoing economic recovery sustainable. These measures include a cumulative 275 basis point increase in the policy rate, higher bank cash reserve requirements, regulatory tightening of consumer finance, and curtailment of non-essential imports,” said a press release issued by the SBP.
The decision was made at a meeting of the Monetary Policy Committee (MPC) on Monday.
“While headline and core inflation rose in December, both the sequential momentum of inflation and inflation expectations of businesses fell significantly.
Together with low base effects, one-off cost-push pressures from energy tariff increases and the removal of tax exemptions in the Finance (Supplementary) Act are likely to keep year-on-year inflation elevated over the next few months, close to the upper end of the average inflation forecast of 9-11 percent in FY22” the statement added.
Hinting towards the next MPC meeting scheduled to be held on March 8, the central bank said: “The MPC will continue to carefully monitor developments affecting medium-term prospects for inflation, financial stability, and growth.”
“If future data outturns require a fine-tuning of monetary policy settings, the MPC expected that any change would be relatively modest,” it said.
It is pertinent to mention here that an interest rate is a tool available with the central bank to control inflation, do away with the unnecessary rupee movement and give a direction to the national economy.
