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SBP maintains policy rate unchanged at 22%

12 December, 2023 18:13

The State Bank of Pakistan (SBP) has decided to keep the policy rate unchanged at 22 percent after the Monetary Policy Committee (MPC) meeting today.

The MPC rate was raised to 22 percent in June 2023 and has remained unchanged for the straight four meetings. The bank’s monetary policy committee said that an increase in gas prices last month could affect the inflation outlook.

The SBP Committee assessed that the real interest rate continues to be positive on a 12-month forward looking basis and inflation is expected to remain on a downward path.

The rate was raised to 22% in an off-cycle meeting in June as a last-gasp attempt to secure a $3 billion bailout from the International Monetary Fund (IMF) as part of a reforms programme aimed at bringing stability to the troubled $350 billion economy.

 

The Monetary Policy Committee (MPC) noted that the successful completion of the staff-level agreement of the first review under the IMF SBA program would unlock financial inflows and improve the SBP’s FX reserves.

Second, the quarterly GDP growth outcome for Q1-FY24 remained in line with the MPC’s expectation of a moderate economic recovery.

Third, recent consumer and business confidence surveys show improvement in sentiments. Finally, core inflation is still at an elevated level and is coming down only gradually.

 

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