KARACHI: The State Bank of Pakistan (SBP) announced to keep the interest rate unchanged at 11 per cent.
The central bank took the decision in its Monetary Policy Committee (MPC) meeting. “At its meeting today, the committee decided to keep the policy rate unchanged at 11%,” according to the MPC statement.
It noted the increase in inflation in May to 3.5 percent y/y was in line with its expectation, whereas core inflation declined marginally.
The monetary policy committee maintained that global oil prices have rebounded sharply, ‘reflecting the evolving geopolitical situation in the Middle East and some ease in US-China trade tensions’.
The MPC estimated that the real interest rate remains adequately positive to stabilise inflation within the target range of 5 – 7%.
The central bank took the decision in its Monetary Policy Committee (MPC) meeting. “At its meeting today, the committee decided to keep the policy rate unchanged at 11%,” according to the MPC statement.
It noted the increase in inflation in May to 3.5 percent y/y was in line with its expectation, whereas core inflation declined marginally.
The monetary policy committee maintained that global oil prices have rebounded sharply, ‘reflecting the evolving geopolitical situation in the Middle East and some ease in US-China trade tensions’.
The MPC estimated that the real interest rate remains adequately positive to stabilise inflation within the target range of 5 – 7%.
Expected inflation in FY 2025-26
“Meanwhile, inflation expectations of both households and businesses moderated. Going forward, inflation is expected to trend up and stabilize in the target range during FY26.”
“The MPC’s initial assessment indicates the recent budgetary measures to have a limited impact on the inflation outlook. Nonetheless, some near-term volatility in inflation is expected, before it gradually inches up and stabilizes within the 5 – 7 percent target range. This outlook, however, remains subject to multiple risks emanating from potential supply-chain disruptions from regional geopolitical conflicts, volatility in oil and other commodity prices, and the timing and magnitude of domestic energy price adjustments.
The monetary policy committee of SBP, taking a monetary policy stance in its previous meeting on May 5 May, noted improved inflation outlook, comfortable position of current account and foreign reserves as well as heightened global uncertainties, decided to slash the policy rate by 100 basis points to 11 percent.
Leave a Comment