KARACHI: The State Bank of Pakistan (SBP) has increased thepolicy rate by one percent, from 16% to 17%.
In a press conference in Karachi, SBP Governor Jameel Ahmad announced that the Monetary Policy Committee (MPC) has increased the interest rate from 16% to 17%.
He stated that there has been some moderation in inflation in the last two months, but core inflation has continued to increase.
He said that the current account deficit still exists, as new funds that were expected have been delayed, putting pressure on foreign exchange reserves.
Governor Ahmad said that the recent forecast of global economic growth by the International Monetary Fund (IMF) and the World Bank is showing a decline, which will have an impact on Pakistan’s market due to uncertainty in the international market.
He also stated that the MPC decided to increase the policy rate after a detailed analysis of the external and financial position of the country.
Ahmed said, “In the real sector growth, the SBP had predicted 2% in its monitoring policy last month, but at this time there is a risk due to the external deficit, and there may be some downward pressure.”
He also said that initially, they thought the current account deficit would be up to 10 billion dollars, but despite a slowdown in exports and remittances.
The Governor said that the MPC also conducted a detailed analysis of inflation and monetary policy, and the committee was of the view that a 1% increase in interest rate is necessary to reduce inflation.
He added that the SBP has already paid off some foreign loans, but some are still outstanding, which has decreased the reserves.
In a press release, the SBP stated that the MPC has noted that the pressure of inflation has persisted, so it has decided to increase the interest rate to 17%.
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