KARACHI: The State Bank of Pakistan (SBP) announced on Monday that it will keep the policy rate unchanged at 12 percent to maintain macroeconomic stability.
After reducing the policy rate from 22 percent in June 2024, the SBP has now set it at 12 percent.
The Monetary Policy Committee (MPC) of the SBP met today and decided to keep the monetary policy rate unchanged, despite analysts expecting a 50 to 100 basis points cut in the interest rate.
After Monday's meeting, the MPC announced its decision and warned of potential risks from rising food and energy prices.
The bank currently maintains an interest rate of 12 percent, while inflation dropped to a minimum level of 1.52% in February.
Earlier, a Reuters survey of 14 analysts suggested that the central bank might further reduce rates, with a median forecast predicting a 50-basis-point cut.
Among the 10 analysts who expected a rate cut, three predicted a 100-basis-point reduction, one estimated 75 bps, and six anticipated 50 bps. The remaining analysts expected no change.
In its statement, the State Bank of Pakistan announced that the Monetary Policy Committee decided to keep the policy rate unchanged at 12 percent, citing lower-than-expected inflation in February, mainly due to a decline in food and energy prices.
“Notwithstanding this decline, the committee assessed the risks posed by the inherent volatility in these prices to the current declining trend in inflation,” the notification said.
The statement noted that core inflation remained persistently high, and a rise in food and energy prices could further increase inflation.
“The MPC assessed the current real interest rate to be adequately positive on a forward-looking basis to sustain the ongoing macroeconomic stability,” the notification read.
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