Monetary Policy: SBP increases interest rate by 12.25 per cent

KARACHI: The State Bank of Pakistan announced the monetary policy on Monday increasing the interest rate by 12.25 per cent.


The interest rate was increased 150 basis points and previously stood at 10.75 per cent. SBP said the current account deficit between July-March 2019 was decreased by 29 per cent.

The current account deficit of first nine months of the fiscal year remained $9.6 billion, SBP further said.

“The committee noted that further policy measures are required to address underlying inflationary pressures from higher recent month-on-month headline and core inflation outturns, recent exchange rate depreciation, an elevated fiscal deficit and its increased monetisation, and potential adjustments in utility tariffs,” read an SBP statement.

The to banks’s estimates showed that economic growth was expected to slow in fiscal year19 but rise modestly in fiscal year20.

“This slowdown is mostly due to lower growth in agriculture and industry. More than two-thirds of real GDP growth in FY19 is expected to come from services.”

The SBP added, “Going forward, some gradual recovery in economic activity is expected on the back of improved market sentiment in the context of the IMF supported programme.”


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