State Bank reserves fall to lowest level since June 2020
The State Bank on Pakistan on Thursday announced an increase of 250 basis points in the benchmark policy rate, taking it to 12.25 per cent in a “strong and proactive policy response”.
The SBP’s Monetary Policy Committee said in a statement that in its last meeting on March 8, it had noted the “significant uncertainty around the outlook for international commodity prices and global financial conditions” which were further exacerbated by the Russia-Ukraine conflict.
“Since the last MPC meeting, the outlook for inflation has deteriorated and risks to external stability have risen,” it noted. “Externally, futures markets suggest that global commodity prices, including oil, are likely to remain elevated for longer and the Federal Reserve is likely to increase interest rates more quickly than previously anticipated, likely leading to a sharper tightening of global financial conditions,” the statement said.
Meanwhile, it noted that on the domestic front the inflation in March had “surprised on the upside” with a core inflation in urban and rural areas rising significantly.
