KARACHI: The State Bank of Pakistan (SBP) on Tuesday decided to maintain its benchmark interest rate unchanged at 22 percent, ARY News reported, citing a statement by central bank.
The announcement came after a meeting of the bank’s Monetary Policy Committee (MPC) today.
“MPC noted that Nov-23 inflation was higher than expected mainly due to gas price hike. While it may have implications for near-term inflation outlook, there are some offsetting developments that include recent decrease in international oil prices & better agriculture output,” the SBP statement noted.
The MPC said that This decision also takes into account the elevated level of core inflation which is moderating at a gtadual pace.
MPC assessed that real interest rate is positive on 12-month forward-looking basis and headline inflation is expected to decline significantly in the second half of FY24.
With a decline in imports, the exports inched up on the back of food items, especially rice while workers’ remittances also improved in October and November 2023 as compared to corresponding months last year due to incentives by SBP and government initiatives to transfer funds through formal channels, and normalization of the kerb premium, it added.
However, tepid official inflows since July and ongoing debt repayments have led to a gradual decline in the SBP’s FX reserves, the Committee observed and hoped that the successful completion of the first review of the ongoing IMF program is likely to improve financial inflows as well as the FX reserves position.
Noting the continued improvement in fiscal indicators, with strong growth of both tax and non-tax revenues the committee observed that during Jul-Nov 2023-24, FBR tax collection grew by 29.6 % while non-tax revenues also increased amidst substantial growth in petroleum development levy and transfer of sizable SBP profit.
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