SBP maintains policy rate at 9.75%

BusinessSBP maintains policy rate at 9.75%

KARACHI, Pakistan: In its meeting held on Tuesday, the State Bank of Pakistan (SBP) Monetary Policy Committee (MPC) has decided to maintain the policy rate at 9.75 percent.

This decision reflected the MPC’s view that the outlook for inflation has improved following the cuts in fuel prices and electricity tariffs announced last week as part of the government’s relief package.

At the same time, high-frequency indicators suggest that growth continues to moderate to a more sustainable pace.

This moderation should help keep at bay demand-side pressures on inflation and contain non-oil imports, notwithstanding the significant uncertainty about the future path of global energy and food prices due to the Russia-Ukraine conflict.

Since the last MPC meeting on January 24, 2022, headline inflation moderated in February to 12.2 percent (y/y). Inflation in February would have been noticeably lower were it not for abnormal increases in a few perishable items. Accordingly, core inflation also fell in urban areas and inflation expectations have remained stable, suggesting that second-round effects from higher commodity prices remain contained.

On the external front, despite the rise in global prices, the February trade deficit witnessed a further 10 percent contraction (m/m) on top of the 29 percent decline recorded in January, confirming the slowdown in domestic demand. While the current account deficit rose in January, this largely reflected lumpy imports of oil, vaccines and other items financed through loans and supplier credit.

Excluding these imports, the deficit would have been about US$ 1 billion lower, suggesting that the underlying trend in the current account balance is also moderating.

Looking ahead, the MPC noted that while current real interest rates on a forward-looking basis are appropriate to guide inflation to the medium-term range of 5-7 percent, support growth, and maintain external stability, the Russia-Ukraine conflict has introduced a high degree of uncertainty in the outlook for international commodity prices and global financial conditions. Continued adverse conditions on these fronts could pose challenges to the outlook for the current account deficit and inflation expectations, which could necessitate changes in the policy rate.

Since the Russia-Ukraine situation remains fluid, the MPC noted that it was prepared to meet earlier than the next scheduled MPC meeting in late April, if necessary, to take any needed timely and calibrated action to safeguard external and price stability.

In reaching its decision, the MPC considered key trends and prospects in the real, external and fiscal sectors, and the resulting outlook for monetary conditions and inflation.

Must read

Recent News

Global peace today is confronted with ever evolving threats and challenges, says COAS Gen Asim Munir

Global peace is confronted with ever-evolving threats and challenges, says COAS Gen Asim Munir

0
Islamabad, Pakistan: General Syed Asim Munir, Chief of Army Staff (COAS) has said that global peace today is confronted with ever-evolving threats and challenges.He...

Pakistan conducted a successful test-fire of ballistic missile by a Navy ship

0
Islamabad, Pakistan: Pakistan has conducted a successful test-fire of an indigenously developed ballistic missile by a Navy ship, reports DND News Agency from Islamabad.The...
The author Dr. Attia Anwar is a consultant family physician with a postgraduate degree from the Royal College of GP UK. She is a strong advocate of health and well-being and wants patient participation in decision-making regarding health.

Altruism is new egotism

0
By Dr Attia AnwarKindness is another thing that makes your life better. It is very important for the pursuit of happiness. After expressing gratitude...
Iranian Foreign Minister Seyed Abbas Araghchi has arrived in Pakistan today on a two-day official visit and he will hold meetings with civil and military leadership of Pakistan. This is his first visit to Pakistan after Israel attacked Iran in response to Iranian attack on certain Israeli cities. His meetings with Prime Minister Muhammad Shehbaz Sharif and Deputy Prime Minister / Foreign Minister Senator Mohammad Ishaq Dar are confirmed. Foreign Minister Araghchi will hold consultations on the situation in the Middle East and Pakistan-Iran bilateral relations. This visit provides an important opportunity to advance cooperation and dialogue between Pakistan and Iran on a wide range of areas including trade, economic, energy and security.

Iranian Foreign Minister Seyed Abbas Araghchi has arrived in Islamabad

0
Islamabad, Pakistan: Iranian Foreign Minister Seyed Abbas Araghchi has arrived in Islamabad today on a two-day official visit and he will hold meetings with...
War Model Criminal Justice Model Punitive Justice System and Restorative Justice System

Anti-Terrorism (Amendment) Bill 2024: Can Pakistan mitigate terrorism only with the ‘War Model’?

0
DND ReportThe re-emergence of terrorism in Pakistan is now obscuring Pakistan’s potential to become an investment-oriented destination. Today, Pakistan depends upon the ‘War...
Advertisement