SBP Maintains Policy Rate at 21% Amidst Projections of Peaking Inflation
State Bank of Pakistan policy rate unchanged: The rate would remain constant at 21 percent for the ensuing two months, according to the State Bank of Pakistan (SBP).
The bank’s Monetary Policy Committee (MPC) had a meeting, after which the announcement was made.
According to the MPC’s analysis, inflation would probably peak in May 2023. The SBP’s press statement indicates that several important factors largely support this projection, including weakened domestic demand, lowered consumer and corporate inflation expectations, a downward trend in global commodity prices, and the major influence of the high base effect.
According to the press release, domestic demand will continue at low levels. The current strict posture, continuous domestic unrest, and ongoing pressure on the foreign account are to blame.
Given these factors and the apparent decreasing trend month over month, the MPC predicts that inflation, which peaked at 38% in May 2023, will continue to decline to start in June, barring any unforeseen occurrences. This was clarified in the press announcement by the bank committee.