Karachi, January 29, 2024 – In a highly anticipated decision, the State Bank of Pakistan (SBP) announced on Monday that it will keep the benchmark policy rate unchanged at 22 percent.
State Bank Governor Jameel Ahmad shared this decision during a press conference following the meeting of the Monetary Policy Committee (MPC).
This marks the fifth consecutive announcement in which the SBP has opted to maintain the policy rate. The central bank had previously raised the policy rate by 100 basis points to 22 percent during its meeting on June 26, 2023.
Governor Jameel Ahmad highlighted that the MPC extensively reviewed various economic indicators before making the decision to retain the interest rate at 22 percent. He provided insights into the current economic landscape, emphasizing key factors considered by the committee.
In the ongoing fiscal year, the current account has recorded a surplus of 80 million dollars over the last six months. The SBP expressed optimism, expecting the current account to stay on target according to projections. Additionally, there has been a notable reduction in risk associated with the current account.
Regarding inflation, Governor Ahmad noted a consistent decrease in the inflation rate since May. Despite inflation remaining at elevated levels, the SBP has chosen to keep the interest rate stable. A comparison between December 23 and January 24 reveals a lower inflation rate, with the expectation of a further decrease in the next five months.
Looking ahead, the committee projected the inflation rate to range between 23 to 25 percent at the conclusion of the current fiscal year. The SBP’s decision was shaped by a comprehensive assessment of economic indicators and a focus on various projections.
Governor Jameel Ahmad highlighted positive developments in industrial production capacity, indicating an improvement in the sector’s overall performance. Economic activities from the industrial side have been viewed positively by the committee.
Addressing growth prospects, the SBP governor stated that the bank anticipates economic growth to remain between 2 to 3 percent for the current fiscal year.
The decision to maintain the benchmark policy rate reflects the SBP’s commitment to carefully navigating economic challenges while fostering stability. The central bank’s focus on multiple economic facets underscores its dedication to informed decision-making and a balanced approach to monetary policy.
