The State Bank of Pakistan on Tuesday kept the monetary policy rate unchanged at 7 percent for next two months for fifth consecutive time.
Sharing the decision taken by the Monetary Policy Committee at a press conference in Karachi, SBP Governor Dr Reza Baqir the benchmark interest rate is being kept unchanged to support the economy during the Covid-19 pandemic.
He said that consumer and business confidence have risen to multi-year highs and inflation expectations have fallen due the consistent policy rate and measures taken by the central bank.
“As a result of these positive developments, growth is projected to rise from 3.9 percent in FY21 to 4 – 5 percent this year, and average inflation to moderate to 7 – 9 percent this year from its recent higher out-turns,” the MPC report read.
Imports are expected to grow on the back of the domestic recovery and rebound in global commodity prices, albeit more moderately than in FY21.
The MPC noted that the market-based flexible exchange rate system, resilience in remittances, an improving outlook for exports, and appropriate macroeconomic policy settings should help contain the current account deficit in a sustainable range of 2 – 3 percent of GDP in FY22.
Notwithstanding this moderate current account deficit, the country’s foreign exchange reserves position is expected to continue to improve this year due to adequate availability of external financing.
