Islamabad, October 30,2023 (PAKONOMY): The State Bank of Pakistan’s Monetary Policy Committee (MPC) has chosen to maintain the key policy rate at 22% following its latest meeting. The committee, which addressed key economic developments, cited expectations of declining inflation in the coming months. Despite concerns about global oil price volatility and increased gas tariffs, the MPC also highlighted positive factors, including targeted fiscal consolidation and improved market availability of essential commodities. The real policy rate remains notably positive on a 12-month forward-looking basis, deemed crucial for achieving the medium-term inflation target of 5-7% by the end of fiscal year 2025.
In its recent meeting, the MPC noted several key developments since the previous session. Encouraging initial estimates for Kharif crops, a significantly narrowed current account deficit in August and September, and progress in fiscal consolidation were all highlighted. Although core inflation remains stable, the outlook is tempered by volatile global oil prices and regional uncertainties.
Market experts had anticipated the maintenance of the policy rate at 22%, with expectations of continued downward pressure on headline inflation in the months ahead. The Pakistani economy has witnessed the appreciation of the rupee, a reduction in petrol prices, and improvements in the current account balance. Despite an agreement with the IMF, challenges persist, including mounting inflation and declining reserves.