Since June 2024, the SBP has reduced the policy rate by a total of 1,000 basis points (bps)
\n Islamabad
\nThe Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) on Monday decided to keep the policy rate unchanged at 12%, citing expectations of a temporary rise in inflation between March and May.
\nIn its announcement, the MPC stated: \u201cAt its meeting today, the committee decided to keep the policy rate unchanged at 12 percent.\u201d
\n\u201cNotwithstanding this decline, the committee assessed the risks posed by the inherent volatility in these prices to the current declining trend in inflation.
\nAt the same time, core inflation is proving to be more persistent at an elevated level, and thus an uptick in food and energy prices may lead to an increase in inflation,\u201d the MPC stated in its latest policy review.
\nThe committee also noted that economic activity is showing signs of improvement as reflected in recent high-frequency indicators. However, concerns remain regarding external account pressures due to rising imports and weak financial inflows.
\n\u201cOn balance, the MPC assessed the current real interest rate to be adequately positive on a forward-looking basis to sustain ongoing macroeconomic stability,\u201d it added.
\nThe decision follows a review by an International Monetary Fund (IMF) delegation which assessed Pakistan\u2019s $7 billion bailout program, including discussions on revenue targets and taxation measures that may impact inflation and monetary policy.
\nSince June 2024, the SBP has implemented an aggressive monetary easing cycle, reducing the policy rate by a total of 1,000 basis points (bps) over six months.
\nInflation dropped to 2.4% in January, the lowest in over nine years, and is projected to decline further to 2.2% in February. However, core inflation remains high, the current account deficit is widening, and market yields are rising, prompting analysts to suggest that the SBP may slow the pace of future rate cuts.
\nIf the IMF review is approved before the June budget, Pakistan could unlock the next tranche of funding as part of its ongoing economic reform commitments under the bailout program.<\/p>\n","protected":false},"excerpt":{"rendered":"
Since June 2024, the SBP has reduced the policy rate by a total of 1,000 basis points (bps) Islamabad The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) on Monday decided to keep the policy rate unchanged at 12%, citing expectations of a temporary rise in inflation between March and May. In […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":{"0":"post-466299","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-top-news"},"yoast_head":"\n