SBP maintains policy rate at 22pc

F.P. Report

KARACHI: The State Bank of Pakistan (SBP) Monday held the key policy rate at 22 percent.

The central bank said the Monetary Policy Committee (MPC) announced maintaining the policy rate at 22 percent.

The committee observed headline inflation rose in September 2023 (31.4%) as expected, a major factor in determining the key policy rate.

Nevertheless, the SBP said, it was projected to decline in October and then maintain a downward trajectory, especially in the second half of the fiscal year.

The committee has expected inflation rate to come down significantly in October due to downward movement in fuel prices, easing prices of some major food commodities, and a favourable base effect.

It added the committee also reiterated its earlier assessment that inflation would reduce substantially from the second half of FY24, barring any major adverse developments.

The central bank said the recent volatility in global oil prices as well as the increase in gas tariffs from November pose some risks to the FY24 outlook for inflation and the current account.

The MPC noted four key developments since its September meeting included the initial estimates for Kharif crops are encouraging, the current account deficit narrowed considerably in August and September, fiscal consolidation remained on track, with both fiscal and primary balances improving during Q1-FY24 and core inflation remains sticky, inflation expectations of both consumers and businesses improved in the latest pulse surveys.