SBP keeps policy rate unchanged at 13.25pc
KARACHI: The State Bank of Pakistan (SBP) decided to leave the policy rate unchanged at 13.25 per cent for the next two months, ARY News reported on Friday.
In a statement issued Friday, the country’s central bank said that the decision was based on the Monetary Policy Committee’s (MPC) view that recent developments have had offsetting implications for the inflation outlook.
“The MPC noted that the SBP’s projection for average inflation for FY20 remained broadly unchanged at 11 – 12 per cent and maintaining the current monetary policy stance was appropriate,” read a press release.
The MPC noted three key developments since the last MPC meeting.
1. The current account balance recorded a surplus in October 2019 after a gap of four years, a clear indication of receding pressures on the country’s external accounts.
2. The government’s primary balance is estimated to record a surplus in the first quarter of FY20, a first since Q2-FY16. This, together with the end of deficit monetization has qualitatively improved the inflation outlook.
3. The most recent business confidence survey shows that businesses expect inflation to fall in the near term suggesting that inflation expectations remain anchored despite the recent increases in food prices.