SBP keeps policy rate unchanged at 22pc for fifth time in a row
KARACHI: (Web Desk) For the fifth policy meeting in a row, the State Bank of Pakistan (SBP) on Monday held its key interest rate at 22 percent.
During a press conference in Karachi, SBP Governor Jameel Ahmad said the SBP’s Monetary Policy Committee (MPC) had reviewed the “current economic developments”, in its meeting held earlier today.
He said, “The MPC decided that the current policy rate, which is 22 percent, will continue. In other words, it decided to maintain the status quo.”
As per SBP governor, the committee noted that Pakistan’s external account had improved as it had been reflected in Pakistan’s foreign exchange reserves. He added that in July 2023, when Pakistan had signed a standby agreement with the International Monetary Fund, forex reserves were more than $4 billion.
He added, “In the past six months, our reserves have increased to more than $8 billion. Right now they are $8.3 billion. This is despite the fact that we have repaid $6.2bn of principle foreign debt.” He noted that interest payments were also done.
So, he added, despite all these payments, Pakistan’s reserves had increased by $4b. He said that the SBP’s forward book, which was at $4.5bn in July, had improved to $3.5b.
in 2022, the current account deficit was very high but was later contained following steps taken by the State Bank and the government, he mentioned. He went on to say that it shrunk from 4.7pc to 0.7pc and in the first six months of the current fiscal year, it was contained and stood at $800m, and a similar trend was continuing in January.
The MPC also reviewed inflation-related developments, he told the media. In May 2023, inflation peaked at 38pc but a declining trend has been noted now. “Although it still remains elevated, inflation will start declining faster from March,” he said.