KARACHI: The State Bank of Pakistan’s Monetary Policy Committee (MPC) on Monday decided to maintain the policy rate at 9.75 per cent for the next two months.
This was the first monetary policy meeting of calendar year 2022. According to traditional practice, the central bank revises its monetary policy rate up or down or keeps it unchanged over the inflation reading and economic activities.
For example, low inflation mainly leads to a reduction in the monetary policy rate to ramp up economic activities and vice versa. Meanwhile, the rate is left unchanged at a higher level to tame inflation or on the lower side to support economic growth.
It is pertinent to mention here that the central bank increased the benchmark interest rate aggressively by 100 basis points to 9.75% last month to counter inflationary pressures and ensure that growth remains sustainable.
The SBP has increased the key policy rate by a cumulative 275 basis points from September to December 2021 to 9.75% to control the rising inflation and narrow the widening current account deficit, while economic activities remain healthy.
