The State Bank of Pakistan (SBP) in its Monetary Policy Committee has announced its decision to maintain the policy rate at 7%.
According to the statement issued by SBP, the Monetary Policy Committee observed that noted current stance of monetary policy remains appropriate to support economic recovery while keeping inflation expectations well-anchored and maintaining financial stability”.
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SBP committee expects that as this “temporary increase in inflation “that is a by-product of “administered prices” subsides, “inflation should fall to the 5-7% target range over the medium-term”.
The Central Bank has said that the committee reviewed the recent rise in inflation and concluded it was “primarily driven by supply side factors and saw little signs of demand led inflation”.
It said that in the absence of “unforeseen developments”, it is expected the monetary policy settings to “remain broadly unchanged in the near term”.
The MPC foresaw that as economic recovery stabilises and makes a return to full capacity possible, the policy rate in the future will be “measured and gradual to achieve mildly positive real rates”.
