The State Bank of Pakistan (SBP) kept interest rates on hold at 7 per cent on Friday as it sought to balance economic headwinds from the Covid-19 pandemic with the need to curb inflation.
“The [Monetary Policy Committee] felt that the existing accommodative stance of monetary policy remained appropriate to support the nascent recovery while keeping inflation expectations well-anchored,” SBP said in a statement.
It is the third time that the central bank has kept its main policy rate unchanged after cutting it by 625 basis points, down from 13.25pc, at the time the global pandemic hit its economy last February.
The bank also provided guidance that it planned to keep interest rates unchanged “in the near term” in the absence of “unforeseen developments”, adding that any changes to interest rates as the economy recovered would have to be “measured and gradual”.
The result, which was largely in line with analysts’ expectations, was in part due to some domestic economic improvement with the bank saying there were upside risks to the projected 2pc growth projected for the 2021 financial year, which ends in June.
SBP Governor Reza Baqir, in a press conference after the committee’s meeting, said that in the “near future […] interest rate will remain the same.