KARACHI: The State Bank of Pakistan (SBP) has decided to maintain the policy rate unchanged at 22 percent.
The SBP in its statement said that the Monetary Policy Committee (MPC) decided to maintain the policy rate at 22% at its meeting on Thursday.
The statemant added that the inflation rate fell from 38 percent in May to 27.4 percent in August, adding rising oil prices in the global market have altered energy prices.
Inflation is on the way to decline in the second half and future real interest rates will remain in positive territory, the SBP added.
It observed that improvement in raw materials and agricultural scenario including cotton has been witnessed.
1/4 زری پالیسی کمیٹی (ایم پی سی) نے آج کے اجلاس میں پالیسی ریٹ کو 22 فیصد پر برقرار رکھنے کا فیصلہ کیا۔https://t.co/RxsBLHPKLm#SBPMonetaryPolicy pic.twitter.com/jS5EMyPoka
— SBP (@StateBank_Pak) September 14, 2023
As global oil prices reached the level of 90 dollars per barrel, petrol became expensive at the local level, the central bank maintained.
The current account deficit narrowed in July after remaining in surplus for the last four months, the SBP statement said.
The Monetary Policy Committee (MPC) has highlighted four significant developments since its July meeting. Firstly, there has been an improvement in the agricultural outlook, supported by recent data on cotton arrivals, improved input conditions, and satellite information indicating healthy vegetation in other crops.
Secondly, global oil prices have experienced an uptick and are currently hovering around the $90 per barrel mark.
Thirdly, as anticipated, the current account, which had remained in surplus for the past four months, registered a deficit in July. This shift is partly due to the impact of recent relaxations in import restrictions.
Lastly, recent administrative and regulatory measures aimed at enhancing the availability of essential food commodities and curbing illicit activities in the foreign exchange market have begun to show positive outcomes. This has led to a reduction in the gap between interbank and open market exchange rates.
The MPC has indicated its commitment to monitoring risks to the inflation outlook and taking necessary action if required to achieve price stability. Simultaneously, the committee has emphasized the importance of maintaining a prudent fiscal stance to control aggregate demand. This fiscal responsibility is crucial for achieving a sustainable reduction in inflation and reaching the medium-term target of 5-7 percent by the end of fiscal year 2025.
