AIRLINK 217.98 Decreased By ▼ -4.91 (-2.2%)
BOP 10.93 Increased By ▲ 0.11 (1.02%)
CNERGY 7.55 Decreased By ▼ -0.01 (-0.13%)
FCCL 34.83 Decreased By ▼ -2.24 (-6.04%)
FFL 19.32 Increased By ▲ 0.08 (0.42%)
FLYNG 25.15 Decreased By ▼ -1.89 (-6.99%)
HUBC 131.09 Decreased By ▼ -1.55 (-1.17%)
HUMNL 14.56 Decreased By ▼ -0.17 (-1.15%)
KEL 5.18 Decreased By ▼ -0.22 (-4.07%)
KOSM 7.36 Decreased By ▼ -0.12 (-1.6%)
MLCF 45.63 Decreased By ▼ -2.55 (-5.29%)
OGDC 222.08 Decreased By ▼ -1.18 (-0.53%)
PACE 8.16 Decreased By ▼ -0.02 (-0.24%)
PAEL 44.19 Increased By ▲ 0.69 (1.59%)
PIAHCLA 17.69 Decreased By ▼ -0.37 (-2.05%)
PIBTL 8.97 Decreased By ▼ -0.10 (-1.1%)
POWERPS 12.51 Decreased By ▼ -0.50 (-3.84%)
PPL 193.01 Decreased By ▼ -5.23 (-2.64%)
PRL 43.17 Increased By ▲ 0.93 (2.2%)
PTC 26.63 Decreased By ▼ -0.76 (-2.77%)
SEARL 107.08 Decreased By ▼ -3.00 (-2.73%)
SILK 1.04 Decreased By ▼ -0.02 (-1.89%)
SSGC 45.00 Decreased By ▼ -2.30 (-4.86%)
SYM 21.19 Increased By ▲ 0.42 (2.02%)
TELE 10.15 Decreased By ▼ -0.37 (-3.52%)
TPLP 14.51 Decreased By ▼ -0.44 (-2.94%)
TRG 67.28 Decreased By ▼ -1.57 (-2.28%)
WAVESAPP 11.29 Decreased By ▼ -0.63 (-5.29%)
WTL 1.70 Decreased By ▼ -0.09 (-5.03%)
YOUW 4.25 Decreased By ▼ -0.10 (-2.3%)
BR100 12,397 Increased By 33.3 (0.27%)
BR30 37,347 Decreased By -871.2 (-2.28%)
KSE100 117,587 Increased By 467.3 (0.4%)
KSE30 37,065 Increased By 128 (0.35%)
Business & Finance

SBP keeps interest rate unchanged at 7%

  • Announcement largely in line with market expectations * The MPC of the central bank was of the view that positive recovery momentum is expected to persist, translating into higher growth next year.
Published May 28, 2021

The State Bank of Pakistan (SBP) Monetary Policy Committee (MPC) has kept the key interest rate at 7% for the next two months.

Friday’s MPC meeting was the first after the central bank’s announcement of a half-yearly schedule on a rolling basis aimed at making the process of monetary policy formulation more transparent.

The MPC, encouraged by the further upward revision in the FY21 growth forecast to 3.94 percent, noted that the forecast confirms the strength of the broad-based economic rebound underway since the start of the fiscal year, on the back of targeted fiscal measures and aggressive monetary stimulus.

The MPC of the central bank was of the view that this positive momentum is expected to persist, translating into higher growth next year. However, uncertainty remains due to the third COVID wave, suggesting a need for monetary policy to remain supportive.

The central bank said that in the absence of unforeseen circumstances, MPC expects monetary policy to remain accommodating in the near term and any adjustments in the policy rate will be measured and gradual to achieve mildly positive real interest rates over time.

The MPC noted that the inflation rate rose to 11.1 percent (y/y) in April, due to the lingering impact of this February’s electricity tariff increase as well as a pick-up in month-on-month food prices, partly driven by the Ramzan season.

It said that as the economy gathers further momentum, it will be important to ensure that food price pressures are reversed through successful implementation of administrative measures to keep second-round effects in check.

Highlighting the latest figures released by the National Income Accounts, MPC said the data confirm that the economy has rebounded strongly from last year’s severe Covid-shock, led by services and industry sectors.

It added that the current economic recovery has been supported by proactive policies of the government and the central bank since the Covid-shock.

The MPC noted that, unlike previous growth upturns in Pakistan, the current economic recovery has been achieved without compromising external stability. Through the first ten months of FY21, the current account has remained in surplus for the first time in 17 years. The uptick in imports in recent months has been largely offset by record remittances, which rose to all-time highs in April.

In addition, exports have shown significant grown of almost 14 percent (y/y) so far this year, noted MPC.

The policy rate was last changed in June 2020, when the MPC reduced it by 100 basis points to 7 percent.

Comments

Comments are closed.