The Monetary Policy Committee (MPC) of the central bank has announced the policy after reviewing the economic indicators.
KARACHI: (UrduPoint/Pakistan Point News-Dec 14th, 2021) The State Bank of Pakistan on Tuesday increased the benchmark interest rate by 100 basis points to 9.75%.
The central bank, keeping in view with the market expectation, made this increase in order to counter inflationary pressures, address the current account deficit, and ensure that growth remains sustainable.
In a statement, the SBP said, “Given rate increases since September and the outlook, the Monetary Policy Committee felt that the end goal of mildly positive real interest rates on a forward-looking basis was now close to being achieved,”.
The SBP hinted towards the next Monetary Policy Committee (MPC) meeting due next year in January, saying that the monetary policy settings are likely to remain broadly unchanged in the near-term.
The MPC held its meeting on Tuesday after Pakistan and IMF reached a staff-level agreement
The MPC met today for the first time after Pakistan reached a staff-level agreement with the International Monetary Fund (IMF) under the sixth review on November 22, 2021.
Today’s meeting was one of the two additional meetings that the central bank had scheduled last onth when it increased its benchmark policy rate by 150 basis points to 8.75 per cent, largely in line with the market expectations because of risks related to inflation.
He said: “ Looking ahead, based on this momentum and the expected path of energy tariffs, inflation is likely to remain within the revised forecast range for the remainder of the fiscal year,”.
It said, “Subsequently, as global commodity prices retrench, administered price increases dissipate, and the impact of demand-moderating policies materialises, inflation is expected to decline toward the medium-term target range of 5-7% during FY23,”.
The central bank also added that the MPC would continue to carefully monitor developments affecting medium-term prospects for inflation, financial stability, and growth.
The financial experts had said earlier that the central bank’s monetary policy committee would raise the policy rate by 100 basis points to control soaring inflation in Pakistan.
It may be mentioned here that the interest rate was 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.
