Karachi (Web Desk): The State Bank of Pakistan (SBP) on Thursday increased the benchmark interest rate by a significant 300 basis points (bps), taking it to 20%.
“At its meeting held on 2nd March 2023, the Monetary Policy Committee (MPC) decided to increase the policy rate by 300 basis points to 20 percent,” the SBP said in a statement.
“During the last meeting in January, the Committee had highlighted near-term risks to the inflation outlook from external and fiscal adjustments. Most of these risks have materialised and are partially reflected in the inflation outturns for February. The national CPI inflation has surged to 31.5 percent y/y, while core inflation rose to 17.1 percent in urban and 21.5 percent in rural basket in February 2023.
“The Committee expects inflation to rise further in the next few months as the impact of these adjustments unfolds before it begins to fall, albeit at a gradual pace,” it added.
Pakistani rupee on Thursday hit a record low by plunging over Rs18.89 against the US dollar in interbank trade during the intra-day trading.
The rupee was trading at 285 against the dollar.
Meanwhile, in the open market, the local unit was trading at Rs292 to a dollar.
According to market experts, the main concern in the market was the delay in the agreement with IMF, however, the lender's condition to peg the currency rate with that of the grey market — also referred to as the Peshawar market — had triggered uncertainty.