Interest rates are increased by SBP to 21 PC.
The monetary policy rate was increased by the State Bank of Pakistan (SBP) by 100 basis points on Tuesday, making it 21%, the highest level since October 1996.
According to the SBP, “MPC regards today’s decision and the cumulative monetary tightening so far as enough to anchor inflation expectations around its medium-term target.”
“MPC stated that there are beginning indicators of inflation expectations plateauing, even though they are at considerable levels.”
— SBP (@StateBank_Pak) April 4, 2023
The committee had identified three crucial factors that had an impact on the macroeconomic outlook, according to the press release.
“First, the current account deficit has shrunk significantly, more so than initially expected, mostly as a result of significant import control. But, with foreign exchange reserves continuing at low levels, the overall balance of payments position is still under pressure, according to the news release.
Extended Fund Facility (EFF) programme:
“Second, significant progress has been made towards finishing the ninth review under the Extended Fund Facility (EFF) programme of the International Monetary Fund (IMF).
“Finally, recent pressures on the global banking system have caused liquidity and financial conditions to become even tighter globally. These have made it much harder for emerging market economies like Pakistan to access global capital markets, according to the statement.
State Bank of Pakistan Policy Rate:
The State Bank of Pakistan (SBP) increased the monetary policy rate to 20% on March 2 by 300 basis points.
Pakistan is taking important steps to restart the frozen IMF credit programme. The International Monetary Funds (IMF) and Pakistan were supposed to sign a staff-level agreement on February 9.