At its meeting on 22nd November 2019, the Monetary Policy Committee (MPC) decided to leave the policy rate unchanged at 13.25 percent. The decision reflected the MPC’s view that recent developments have had offsetting implications for the inflation outlook.
On the one hand, recent inflation outturns have been on the higher side. On the other, the causes behind these outturns have primarily been increases in food prices which are expected to be temporary.
Also, market sentiment has begun to gradually improve on the back of sustained improvements in the current account and continued fiscal prudence.
The MPC noted that the SBP’s projection for average inflation for FY20 remained broadly unchanged at 11 – 12 percent and maintaining the current monetary policy stance was appropriate. In reaching this decision, the MPC considered key developments since the last MPC meeting, developments in the real, external and fiscal sectors, and the resulting outlook for monetary conditions and inflation.