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State Bank keeps monetary policy unchanged at 22pc

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KARACHI – State Bank of Pakistan (SBP) on Monday maintained the key policy rate at 22 percent, it was announced after a meeting of Monetary Policy Committee (MPC).

March 18 meeting was the sixth consecutive huddle where State Bank opted to maintain the same rate.

In a statement, the bank said Monetary Policy Committee (MPC) has chosen to keep the policy rate unchanged at 22percent and anticipated that inflation, in line with earlier expectations, has begun to decline noticeably from H2-FY24.

MPC officials Committee said despite the significant slowdown in February, there was uptick in inflation, and ts outlook is susceptible to risks amidst elevated inflation expectations. This calls for a cautious approach, and maintaining the current monetary policy stance is deemed necessary to bring inflation down to the target range of 5–7% by September 2025.

In the key huddle, MPC central said assessment relies on continued targeted fiscal consolidation and timely realization of planned external inflows.

State Bank highlighted moderate increase in economic activity, driven by a rebound in agriculture output. Additionally, the external current account balance has been better than expected, helping maintain foreign exchange buffers despite weak financial inflows.

Inflation expectations for businesses have steadily increased since December, and those for consumers have also risen in March. While global commodity prices have generally remained stable, oil prices have risen due to ongoing tensions in the Red Sea.

The MPC warned that any further adjustments in administered prices or fiscal measures could pose risks to the near- and medium-term inflation outlook. Considering these risks, the Committee deemed it prudent to maintain the current monetary policy stance at this time.

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