Pakistan has increased profit rates for saving accounts to 13.50 per cent per annum from 12.25 per cent.
The Central Directorate of National Savings (CDNS), the authority to manage the saving schemes in Pakistan, has announced the increase in profit rates on various schemes.
READ MORE: Pakistan hikes key policy rate by 125 basis points to 15%
According to Arif Habib Limited, the authority announced the increase in profit rates for two schemes.
The profit rate of savings accounts has been increased by 125 basis points to 13.50 per cent from 12.25 per cent
Similarly, the profit rate has been increased for regular income certificates by 24 basis points to 12.60 per cent from 12.36 per cent.
However, profit rates for other schemes are remained unchanged. The profit rates for the other scheme are: Defence Saving Certificate at 12.40 per cent; Behbood Saving Certificate at 14.16 per cent; Special Saving Certificates at 13 per cent; and Pensioner Benefit Account at 14.16 per cent.
READ MORE: Pakistan may see further 100bps hike in policy rate
The increase in profit rates of saving schemes have been announced after the key policy rate was hiked to 15 per cent.
On July 7, 2022, the State Bank of Pakistan (SBP) announced to increase the policy rate by 125 basis points to 15 per cent.
This combined action continues the monetary tightening underway since last September, which is aimed at ensuring a soft landing of the economy amid an exceptionally challenging and uncertain global environment. It should help cool economic activity, prevent a de-anchoring of inflation expectations and provide support to the Rupee in the wake of multi-year high inflation and record imports.
However, several adverse developments have overshadowed this positive news. Globally, inflation is at multi-decade highs in most countries and central banks are responding aggressively, leading to depreciation pressure on most emerging market currencies.
READ MORE: SBP increases interest rate by 150bps to 13.75%
“This strong monetary tightening has occurred despite concerns about a slowdown in global growth and even recession risks, highlighting the primacy that central banks are placing on containing inflation at this juncture,” the SBP said.
Domestically, as energy subsidies were reversed, both headline and core inflation increased significantly in June, rising to a 14-year high. Inflation expectations of consumers and businesses also rose markedly.
At the same time, the current account deficit unexpectedly spiked in May and the trade deficit continued its post-March widening trend to reach a 7-month high in June, on burgeoning energy imports. As a result, FX reserves and the Rupee remained under pressure, further worsening the inflation outlook, the central bank added.
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