SBP Maintains Key Policy Rate at 22%
By
March 19, 2024
- This marks the sixth consecutive choice by Pakistan’s central bank to keep rates unchanged.
The State Bank of Pakistan (SBP) has decided to keep its main policy rate steady at 22%, marking the sixth time it has done so in a row. The decision was announced on Monday following a meeting of the Monetary Policy Committee (MPC). The MPC noted a decline in inflation but highlighted ongoing risks and uncertainties, prompting them to maintain the current monetary stance to bring inflation down to the target range of 5–7% by September 2025.
The MPC also mentioned that other central banks around the world are adopting cautious monetary policies amidst uncertain inflation outlooks. They emphasized the importance of continued fiscal consolidation and timely external inflows for Pakistan’s economic stability.
Factors considered by the MPC included moderate economic activity growth, better-than-expected external account balance, and increased inflation expectations among businesses and consumers. They cautioned against further price increases due to administered prices or fiscal measures.
In the lead-up to the decision, market experts were divided, with some expecting the status quo to be maintained due to ongoing IMF discussions, while others anticipated a rate cut due to declining inflation and stable economic indicators.
The SBP’s previous meeting in January had also seen the policy rate unchanged at 22%, with revised inflation projections for fiscal year 2023-24. Since then, the economy has seen some fluctuations, including a slight appreciation of the rupee and volatility in international oil prices.
