KARACHI – State Bank of Pakistan (SBP) has decided to keep the policy rate unchanged at 21 percent for the next two months.
In a press release, the central bank said the announcement came after a meeting of the bank’s Monetary Policy Committee (MPC).
SBP maintained that officials’ pre-inflation is likely to have peaked in May 2023, and Weak domestic demand; ease in inflation expectations of consumers and businesses; downward trend in global commodity prices; and high base effect, are the major determining factors behind this assessment.
Monetary Policy Committee expected the domestic demand to remain subdued amid tight stance, domestic uncertainty, and continuing stress on external account.
Amid economic uncertainty, the central bank views inflation to have peaked at 38pc in May 2023, and barring any unforeseen developments, expects it to start falling from June onwards.
The press release said provisional National Accounts estimates show real GDP growth to have decelerated considerably during FY23. It said the budget for FY24 on June 9 envisages a slightly contractionary fiscal stance against the revised estimates for FY23.
Furthermore, global commodity prices and financial conditions have eased recently and are expected to persist in near term. State Bank views the current monetary policy stance, with positive real interest rates on forward-looking basis, as appropriate to anchor inflation expectations and to bring down inflation towards the medium-term target – barring any unexpected domestic and external shocks.
