Karachi: The State Bank of Pakistan (SBP) on Friday (November 19) hiked its benchmark interest rate by 150 basis points to 8.75% from 7.25% at an earlier-than-expected Monetary Policy Committee (MPC) meeting, news sources reported. The meeting was scheduled to take place on November 26 (Friday) but was convened earlier ‘to normalise monetary policy to counter inflationary pressures and preserve stability with growth’.
According to sources, the MPC statement stated that the policy rate change is in reaction to the rising inflation rate experienced in recent months, as well as higher energy and core inflation rates. As per the statement, the policy rate change will relieve pressure on the local currency while also helping to reduce the current account deficit (CAD), which has climbed to USD 3.4 billion in the first quarter of the Fiscal Year (FY) 2021-22.
Earlier, the central bank held an MPC in September, during which it raised the policy rate by 25 basis points to 7.25% from the previously maintained 7%. According to news sources, prior to the latest MPC, financial analysts predicted a change in the policy rate, but the adjustment in the policy rate by 150 basis points was unexpected.
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.
