KARACHI – The State Bank of Pakistan (SBP) on Friday announced to keep the policy rate unchanged at 7 per cent for fourth consecutive time for next two months in a move to support economic recovery while keeping inflation expectations well-anchored and maintaining financial stability
The Monetary policy Committee of the central bank viewed recent inflation uptick as primarily driven by supply side factors and saw little signs of demand led inflation.
As the temporary increase in inflation from administered prices subsides, inflation should fall to the 5-7 percent target range over the medium-term, the SBP said in a statement.
1/3 MPC of #SBP, maintained policy rate at 7%. MPC noted current stance of monetary policy remains appropriate to support economic recovery while keeping inflation expectations well-anchored and maintaining financial stability. https://t.co/MiMfdOuf08
— SBP (@StateBank_Pak) March 19, 2021
In absence of unforeseen developments, MPC expects monetary policy settings to remain broadly unchanged in near term.
“And as recovery becomes more durable and economy returns to full capacity, any adjustment in policy rate to be measured and gradual to achieve mildly positive real interest rates,” it added.
The SBP revises the policy rate up or down or keeps it unchanged in connect with the inflation rate and economic activities.
The policy rate is decreased when inflation is at low level to give a boost to economic activities in the country.