KARACHI: The State Bank of Pakistan (SBP) clarified on Monday that the central bank’s average inflation forecast of 7-9% in the current fiscal year is not “inflation target”.
“In some sections of the media, SBP’s average inflation forecast of 7-9% in FY22 is being interpreted as the “inflation target” and being compared to the inflation targets of other countries. This is incorrect,” a statement issued by the SBP said.
It said the SBP’s inflation forecast represents its projections for the current fiscal year. On the other hand, Pakistan’s inflation target is set by the government, which is 5-7 %, it added.
The central bank explained that this target is to be achieved over the medium term as the monetary policy is anchored on achieving the government’s inflation target over the medium term, i.e. over the next 18-24 months.
Last week, the State Bank of Pakistan raised the interest rate by 150 basis points to 8.75 per cent for the next two months while keeping in view the risks related to inflation and the balance of payments.
Sharing the details of the monetary policy committee (MPC), the SBP said that the rise in interest rate reflects their view that since the last meeting, risks related to inflation and the balance of payments have increased while the outlook for growth has continued to improve.