KARACHI, Pakistan : Pakistan’s central bank kept its key rate unchanged at 22 per cent on Monday after a scheduled meeting of its monetary policy committee, with inflation expected to decline gradually in coming months, the bank’s governor said.
Governor Jameel Ahmad also told a press conference that the inflation outlook for the next fiscal year was between 20 per cent and 22 per cent.
The International Monetary Fund, he added, had only asked that Pakistan’s monetary policy stance remain “aggressive” and did not necessarily require a lifting of rates.
The monetary policy committee meeting was the first since a new $3 billion bailout was approved by the IMF earlier this month for the ailing economy that was teetering on the brink of a global debt default.
Ahmad said Pakistan was on “on course” to meet the medium-term inflation target of 5-7 per cent and that the bank would ensure it complied with the IMF requirement of keeping the open market and inter bank rates for the currency close to one another.
The IMF signalled following the bailout that the bank must continue with its monetary tightening cycle to tame inflation.
The State Bank of Pakistan (SBP) has raised its key policy rate by 12.25 per centage points since April 2022, to curb soaring inflation.
The rise in the consumer price index rise slowed in June from a record high of 38 per cent year on year in May, but remained elevated at 29.4 per cent. The CPI index decreased 0.3 per cent in June from May.
The government projects inflation to average 21 per cent for the current fiscal year that started on July 1. The IMF, however, forecasts inflation at 25.9 per cent for the same period.
Pakistan’s central bank raised the key rate by 100 basis points to 22 per cent in an off-cycle meeting in June, just weeks after having held rates at a scheduled meeting.
Pakistan’s government said the rates had been increased on the IMF’s demand in the run-up to the approval of the new bailout agreement.