ISLAMABAD: Despite expectations from the business sector to get some news of a decrease in the interest rate this time, the State Bank of Pakistan (SBP) continued to maintain the status quo for 7th consecutive move and kept the key interest rate 22% without any change.
According to a press release received here the Monetary Policy Committee (MPC) of the SBP on Monday kept the key interest rate steady at 22%, as the Committee noted that the macroeconomic stabilization measures were contributing to considerable improvement in both inflation and external position, amidst moderate economic recovery.
However, the committee was of the view that the level of inflation was still high along with unevenness in the commodity prices at the global level.
Reasons for Holding Interest Rate Unchanged
According to MPC, the recent geopolitical concerns have also added uncertainty about their outlook adding that the upcoming budgetary measures might have implications for the near-term inflation stance. Therefore, the Committee opted to continue the current monetary policy rate to bring inflation down to the target range of 5–7 percent by September 2025.
The statement from the MPC further stated that the inflation in March went down to 20.7% year-on-year, and core inflation declined significantly to 15.7% from 18.1% in February.
However, the committee also noted that this inflation stance was vulnerable to risks emanating from the recent global oil price volatility (due to geo-political tension) along with the bottoming out of other commodity prices; potential inflationary effect of resolution of circular debt in the energy sector coupled with tax rate-driven fiscal consolidation going forward.
Earlier business community were predicting a slight cut in the interest rate which already influenced the stock market as bullish during the last couple of days. However, SBP kept the policy rate unchanged for the 7th consecutive time since June 2023.End
