LAHORE MIRROR – The Monetary Policy Committee of the State Bank of Pakistan (SBP) has decided to maintain the policy rate at 22%, the SBP said in a statement.
In a notification released on Thursday by the State Bank of Pakistan (SBP), the Monetary Policy Committee (MPC) convened to discuss the policy rate and made the decision to keep it unchanged at 22 per cent.
This decision was reached following a comprehensive review of various economic factors.
One significant factor taken into account was the current inflation rate, which has been showing a consistent downward trend. Starting from its peak at 38 per cent in May, it had decreased to 27.4 per cent by August 2023.
Monetary Policy Statement of the State Bank of Pakistan-MPS-SBP- Sep-14-2023.
Despite recent increases in global oil prices, leading to adjustments in administered energy prices, the projection is that inflation will continue to follow a downward trajectory, particularly in the year’s second half.
Consequently, real interest rates will remain in positive territory looking forward. Furthermore, an anticipated improvement in supply constraints due to better agricultural output and recent administrative measures to counter speculative activities in the foreign exchange and commodity markets are expected to bolster the inflation outlook.
The MPC acknowledged four key developments since its July meeting.
Firstly, there has been an improvement in the agricultural outlook, supported by data on cotton arrivals, improved input conditions, and satellite data indicating healthy vegetation for other crops.
Secondly, global oil prices have seen an increase, with prices now hovering around $90 per barrel. Thirdly, as predicted, the current account, after four months of surplus, registered a deficit in July, partly due to the easing of import restrictions.
Lastly, administrative and regulatory measures aimed at enhancing the availability of essential food items and curbing illegal activities in the foreign exchange market have begun to show results.
These measures have contributed to narrowing the gap between interbank and open market exchange rates.
