State Bank of Pakistan (SBP) Governor Jameel Ahmad announced on Monday that the Monetary Policy Committee (MPC) had decided to increase the interest rate by one per cent to 17pc.
He made the announcement in a press conference following the MPC’s meeting. The increase was largely in line with market expectations.
Separately, a press release issued by the central bank stated, “The committee noted that inflationary pressures are persisting and continue to be broad-based. If these remain unchecked, they could feed into higher inflation expectations over a longer-than-anticipated period. The MPC stressed that it is critical to anchor inflation expectations and achieve the objective of price stability to support sustainable growth in the future.”
The MPC noted three major economic developments since its last meeting in November inflation continued to remain elevated, with core inflation showing an upward trend over the last 10 months; near-term challenges for the external sector have increased despite the policy-induced contraction in the current account deficit and there has been a continuous drawdown in foreign exchange reserves; and global economic and financial conditions broadly remain uncertain in the near-to-short term, leading to mixed implications for Pakistan’s economy.