Pakistan’s central bank, the State Bank of Pakistan (SBP), announced on Monday that it will keep its key interest rate unchanged at 22 percent for the seventh consecutive policy meeting. This decision comes amidst ongoing efforts to address inflationary pressures and stabilize the country’s economy, which has been grappling with limited foreign exchange reserves.
The decision to maintain the key interest rate follows a series of increases implemented since June, aimed at combating persistent inflationary pressures and meeting conditions set by the International Monetary Fund (IMF) for securing financial assistance. Pakistan entered into a $3 billion standby arrangement with the IMF last summer to prevent a sovereign default, with hopes of signing a longer-term program.
Reforms undertaken as part of the IMF program have presented challenges in managing price pressures, complicating the task of curbing inflation. Despite these challenges, there has been a slowdown in the pace of inflation, primarily attributed to the high base effect.
Pakistan’s consumer price index (CPI) for March recorded a 20.7 percent increase compared to the same month last year, marking the lowest reading in nearly two years. This figure also falls below the projections set by the finance ministry for the month, indicating some positive trends in inflation management.
The decision to maintain the key policy rate reflects the ongoing efforts to balance economic stability with inflationary concerns. As Pakistan continues its journey towards economic recovery, measures taken by the central bank will play a crucial role in managing inflationary pressures and promoting sustainable growth.
