Karachi (Web Desk): The State Bank of Pakistan (SBP) on Tuesday further tightened its monetary policy, jacking up key policy rate by 100 basis points to a record high of 21 percent.
The central bank’s Monetary Policy Committee noted that inflation in March reached 35.4%, and is expected to remain high in the near term. But noted that the early indicators showed that “inflation expectations plateauing, albeit at an elevated level”.
Last month, the SBP 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 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.
