The State Bank of Pakistan (SBP) has decided to maintain the status quo and keep the key policy rate unchanged at 22 per cent to keep the aggregate demand in check, according to a press release issued on Tuesday.
“The decision does take into account the impact of the recent hike in gas prices on inflation in November, which was relatively higher than the MPC’s earlier expectation,” the central bank explained after a meeting of the bank’s Monetary Policy Committee (MPC).
“The Committee viewed that this may have implications for the inflation outlook, albeit in the presence of some offsetting developments, particularly the recent decrease in international oil prices and improved availability of agriculture produce.”
In light of the recent development, the press release said, “the current monetary policy stance is appropriate to achieve the inflation target of 5-7 percent by end-FY25.”
The decision to keep the interest rate unchanged was anticipated and at par with several analysts’ expectations. A report by Topline Securities showed that 63pc of key market players expected no change in the key rate.
Previously, Pakistan Bureau of Statistics data showed inflation in November hit another another high of 29.2, a slight increase from October but well below a peak of 38pc in May. The two major factors behind the hike were noted to be gas prices, which have jumped by 520pc in the month of November, and electricity rates.
