KARACHI: The State Bank of Pakistan (SBP) Thursday announced to maintain the key policy rate at 22%. In accordance with a statement released by the central bank, the Monetary Policy Committee (MPC) chose to keep the policy rate unchanged at 22%. This decision was influenced by the most recent inflation figures, which show a consistent decrease in inflation rates, declining from its peak of 38% in May to 27.4% in August 2023.
The MPC, established as a statutory committee under the SPB Act, took note of the fact that despite recent increases in global oil prices and their subsequent pass-through to consumers via adjustments in administered energy prices, inflation is projected to continue its downward trajectory, particularly in the latter half of this year.
The MPC highlighted four significant developments observed since its July meeting:
First, the outlook for agriculture has improved, as indicated by the latest data on cotton arrivals, improved input conditions, and satellite data showing healthy vegetation for other crops.
Second, global oil prices have risen and are currently hovering around the $90 per barrel level.
Third, as expected, the current account shifted from a surplus to a deficit in July, following four consecutive months of surplus. This shift partly reflects the impact of recent relaxation of import restrictions.
Finally, recent administrative and regulatory measures aimed at enhancing the availability of essential food items and curbing illicit activities in the foreign exchange market have started to yield results. This has contributed to a reduction in the gap between interbank and open market exchange rates.
Furthermore, the committee decided to continue monitoring the risks to the inflation outlook and pledged to take appropriate measures if necessary to achieve the goal of price stability. The MPC also emphasized the importance of maintaining a prudent fiscal stance to manage aggregate demand effectively.