Interest rate to remain unchanged at seven percent, announces SBP

KARACHI: The State Bank of Pakistan (SBP) on Friday announced that the monetary policy committee (MPC) has decided against changing the interest rate from seven percent for the next two months, ARY NEWS reported.

“The interest rate will remain unchanged at seven percent for the next two months,” the SBP announcement read.

1/3 MPC of #SBP, maintained policy rate at 7%. MPC noted current stance of monetary policy remains appropriate to support economic recovery while keeping inflation expectations well-anchored and maintaining financial stability. https://t.co/MiMfdOuf08

— SBP (@StateBank_Pak) March 19, 2021

The central bank further said that the rate of inflation would remain between seven to nine percent during the ongoing fiscal year. “Most of the economic indicators are getting improved,” it said adding that large-scale manufacturing has also witnessed positive growth.

The SBP further said that the MPC viewed recent inflation uptick as primarily driven by supply-side factors and saw little signs of demand-led inflation.

3/3In absence of unforeseen developments, MPC expects mon policy settings to remain broadly unchanged in near term. And as recovery becomes more durable and economy returns to full capacity, any adjustment in policy rate to be measured and gradual to achieve mildly +ve real rates

— SBP (@StateBank_Pak) March 19, 2021

“As the temporary increase in inflation from administered prices subsides, inflation should fall to the 5-7 percent target range over the medium-term,” it said.

It further said that in absence of unforeseen developments, the MPC expects monetary policy settings to remain broadly unchanged in the near term.