State Bank of Pakistan decides to maintain policy rate at 7%

State Bank of Pakistan decides to maintain policy rate at 7%


The National Bank of Pakistan announced on Friday that it will maintain the policy rate at 7% to support economic recovery.

The decision was taken at a meeting of the Monetary Policy Committee (MPC) today, following which a statement was issued by the central bank.

The committee noted that the “current stance of monetary policy remains appropriate to support economic recovery while keeping inflation expectations well-anchored and maintaining financial stability”.

SBP said that the committee reviewed the recent rise in inflation and concluded that it was “mainly driven by supply-side factors and there is little evidence that demand is causing inflation.”

The central bank committee expects that as this “temporary increase in inflation” that is a by-product of “administered prices” subsides, “inflation should fall to the 5-7% target range over the medium-term”.

It said that in the absence of “unforeseen developments”, it is expected that the monetary policy environment “will remain largely unchanged in the short term.”

The Monetary Policy Committee predicts that as the economic recovery stabilizes and full production is likely to resume, the future policy interest rate will be “gradually measured to achieve a moderate real interest rate.”

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