Karachi: The State Bank of Pakistan (SBP) on Tuesday (December 14) raised its monetary policy rate by 100 basis points, which brought the interest rate to 9.75 %, according to news reports. The policy rate has been raised from 8.75 %, marking the third straight hike in the policy rate in response to the shifting dollar-to-rupee parity, inflation and rising current account deficit (CAD).
According to the report, the decision to hike the policy rate was made during a meeting of the Monetary Policy Committee (MPC). Informing the public of the change in interest rate from the SBP’s official Twitter handle, the central bank maintained that the reduction in the policy rate will help sustain growth and reduce inflation. It was also stated that the MPC expects monetary policy to remain unchained in the near future following the recent hike. Moreover, SBP Governor Dr Reza Baqir stated that the move was predicted; nonetheless, the government is expected to maintain the interest rate generally constant in the forthcoming MPC on January 24, 2022.
Furthermore, according to the press release, SBP expects the inflation rate to remain between 9 to 11% this fiscal year, while GDP growth is expected to reach the upper forecast rate of 4-5%. It is important to note that so far SBP has made a third consecutive change in interest rate since September with the recent hike of 150 basis points on November 19. The market watchers have predicted the interest rate and many expect it to go further up in response to the rising CAD and international market situation.
Nauman Ahmad is an imaginative Pisces whose love for literature and nature is unparalleled. When he's not reading or hiking, he's sleeping and eating, which gives him plenty of energy for his next adventure.
