KARACHI – The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) has kept the key policy rate unchanged at 22 per cent.
After the MPC meeting on Monday, SBP Governor Jameel Ahmad said that the key policy rate would remain unchanged at 22pc. He said that the inflation remained high and the figure for the financial year 2023-24 has been revised upwards to 23-25 per cent.
Keeping in view the key factors, he said, the MPC has decided to maintain the key policy rate at 22pc till the next meeting.
1/3 The Monetary Policy Committee (MPC) decided to maintain the policy rate at 22 percent in its meeting held today.https://t.co/MutCaBVSV3#SBPMonetaryPolicy pic.twitter.com/0ZFWnGJ1Kw
— SBP (@StateBank_Pak) January 29, 2024
While arriving at the decision, the MPC observed that the frequent and sizeable adjustments in administered energy prices have slowed down the pace of decline in inflation anticipated earlier, besides impeding a sustained decrease in inflation expectations.
On the other hand, the non-energy inflation continues to moderate, in line with the Committee’s expectations. On balance, the Committee viewed that the real interest rate remained significantly positive on 12-month forward looking basis, as inflation is expected to remain on a downward path.
The MPC noted several key developments since its December meeting, which have implications for the economic outlook.
First, the FX reserves have improved on the back of a notable surplus in the current account in December and significant financial inflows, including the latest IMF SBA tranche.
Second, fiscal consolidation remained on track and complemented the monetary policy stance.
Third, the business sentiments, as reflected in the recent surveys, continued to improve.
However, the escalated geopolitical tensions in the Red Sea region have led to a surge in global freight charges and are posing risks for global trade and commodity prices.
Taking stock of these developments as well as still-elevated levels of both headline and core inflation, the Committee emphasized on continuing with the tight monetary policy stance.
This, along with continued fiscal consolidation and timely realization of planned external inflows, will help to achieve the inflation target of 5-7pc by September 2025.
