Despite the strengthening of the USD currency market, the State Bank of Pakistan (SBP) forecasted that the inflation rate would begin to decline in November.
Inflation going down in November: A statement from the central bank noted the improvement in the agricultural sector and an increase in cotton imports. It was mentioned that the administration’s rigorous measures have improved the foreign exchange market for US dollars.
In an effort to stabilise commodity prices nationwide, the central bank hinted at harsh measures. By 2025, the goal was to bring down inflation to 5 to 7%.
Inflation would peak in October, according to the SBP, before declining in November.
A new monetary strategy
According to a press statement released today, the State Bank of Pakistan (SBP) on Thursday opted to maintain the key policy rate at 22 percent.
The announcement followed a meeting of the bank’s Monetary Policy Committee (MPC).
Even though oil prices have recently increased globally, the MPC observed that it still expects inflation to decrease, especially starting in the second half of this year.
The restrictive monetary policy stance, improved agricultural prospects, and recent administrative and regulatory improvements, according to the MPC, will all contribute to meeting the medium-term inflation objective.
The committee also emphasised the need to maintain a responsible fiscal posture in order to restrain aggregate demand.
The MPC stated that it will keep an eye on the risks to the inflation forecast and, if necessary, will take the necessary steps to achieve price stability.
In order to control aggregate demand, the MPC also emphasised maintaining a careful budgetary posture.
This is important to attain the medium-term target of 5-7% by the end of FY25 and to reduce inflation on a sustainable basis.