State Bank of Pakistan (SBP) on Monday decided to keep its key policy rate unchanged at 22%.
The Monetary Policy Committee (MPC) said in its meeting today that macroeconomic stabilization measures are contributing to a significant improvement in inflation and external conditions during moderate economic recovery.
“However, the MPC found that the inflation rate is still high. At the same time, global commodity prices seem to have moderated with steady global growth,” he said.
The MPC said recent geopolitical events had added uncertainty to its outlook. In addition, the upcoming fiscal measures may affect the outlook for inflation in the near term.
On balance, the committee emphasizes continuing the current monetary policy to keep inflation down between 5-7% by September 2025.
‘A significant surplus has been recorded in the current account’
The MPC said data for the first half of fiscal 2024 showed a moderate recovery in economic activity, with a strong rebound in agriculture.
Further, the current report has recorded a significant surplus in March 2024, which has helped stabilize SBP’s foreign exchange reserves despite significant debt write-offs and weak financial flows.
“Third, consumer inflation expectations have risen in April 2024, while those for businesses have fallen. Finally, leading banks, especially in advanced economies, have seen the pace of disinflation ease slightly in recent months, leading to cautious policies.”
He also said incoming data continues to support the MPC’s expectations of a moderate recovery this fiscal year, with real GDP growth remaining between 2% and 3%.
Agriculture remains the key driver with strong growth of 6.8% in the first half of FY24.
Large-scale manufacturing in the industrial sector reported a 0.5% contraction in the July-February period, compared with a 4.0% contraction in the same period last year, reflecting the impact of slightly weaker-than-expected first-half growth in services. sector. subjugated desire
