The State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) on Monday kept the interest rate unchanged at 11.5 per cent.
The decision was announced by SBP Governor Jameel Ahmed during a press conference.
At the outset of the press conference, the governor said, “MPC has decided to keep the policy rate unchanged at 11.5pc”.
“There were several reasons for this, but I would like to explain some background: every time we hold committee meetings in January and July, we also issue projections for the next six months and what would be the level of economic growth, inflation outlook and situation of the external account; I will share that assessment as well.”
The governor explained that in the first half of the previous year, inflation was declining; however, “the fallout from the Middle East crisis impacted our domestic situation”.
“From July to February, our average inflation was 5.5pc,” which he said was within the government’s target range of 5-7pc.
However, due to the Middle East crisis, inflation began to increase, he added. “In June, it was at 11.1pc, and in May, it stood at 11.7pc, and we are hoping that if there is no further escalation, then after one to two months, we will see a decline in inflation,” he said.
“We believe that towards the end of June next year, it will be within the upper band of our target range, either a little over seven or close to seven,” he said, but warned that “there are still risks associated due to the direct impact of the geopolitical situation”.
