State Bank of Pakistan announces new monetary policy; increase interest rate by 2.5%

Pakistan's total debt

Karachi: In a major development, the State Bank of Pakistan set the monetary policy at 12.25% as the Monetary Policy Committee (MPC) decided to raise the policy rate by 250 basis points as the country grapples with uncertainty around the outlook for international commodity prices and global financial conditions, which had been exacerbated by the Russia-Ukraine conflict.

In the statement issued by the State Bank of Pakistan, it was noted that the SBP was also taking further complementary actions to reduce pressures on inflation and the current account, namely, an increase in the interest rate on the export refinance scheme (EFS) and widening the set of import items subject to cash margin requirements.

However, the MPC hoped that in the wake of today’s decisive actions, together with a reduction in domestic political uncertainty and prudent fiscal policies, Pakistan’s robust economic recovery from COVID could remain sustainable.
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