The State Bank of Pakistan (SBP) decided to hold the policy rate steady at 21 percent for the next two months.
The announcement follows a meeting held by the bank’s Monetary Policy Committee (MPC).
The MPC’s analysis projected that inflation would most likely reach its zenith in May 2023. This forecast is primarily grounded in several key factors, including diminished domestic demand, the reduction of consumer and business inflation expectations, a downward trajectory in global commodity prices, and the significant impact of the high base effect, according to the SBP’s press release.
The press statement further explained that domestic demand would persist at subdued levels. This is due to the current stringent stance, ongoing domestic uncertainty, and the sustained pressure on the external account.
Considering these circumstances and the observed declining month-on-month trend, the MPC anticipates that inflation, having spiked at 38% in May 2023, will continue downward from June onward unless any unexpected developments occur. The bank’s committee clarified this in the press release.