SBP maintains interest rate at 22%

KARACHI: The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) has resolved to uphold the prevailing status quo by opting to maintain the key policy rate at 22%.

This decision aims to curtail aggregate demand, reflecting the committee’s strategic approach to monetary policy.

State Bank Governor Jamil Ahmad held a media briefing on Monday to announce the monetary policy for the next two months. He said that the Monetary Policy Committee (MPC) decided to maintain the interest rate at 22 percent, as the current account deficit narrowed to 0.7 per cent of GDP due to the government’s fiscal and structural reforms. However, he also acknowledged that the country suffered a loss of 800 million dollars in foreign exchange reserves.

He said that the MPC considered the inflationary pressures in the economy, which reached a peak of 29 per cent . The governor said that the inflation rate has started to decline gradually, and expressed optimism that it will fall further. He attributed the high inflation to the global surge in energy prices, which forced the government to increase the domestic tariffs of electricity and gas.

The governor also highlighted the positive signs of economic recovery, as the industrial production capacity improved and the industry responded favorably to the economic stimulus measures.

He said that the MPC projected the economic growth rate for the current fiscal year to be between 2 and 3 per cent, which is higher than the previous year’s negative growth. He added that the State Bank will continue to support the economic revival and stability, while keeping an eye on the inflationary trends.

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