KARACHI: ON Friday, the State Bank of Pakistan (SBP) announced its monetary policy increasing its key policy rate by 50 basis points to 10.75 per cent.
The policy was announced following a meeting of the central bank’s Monetary Policy Committee, which had raised the key policy rate by 25 basis points to 10.25 percent in January in the face of high fiscal and current account deficits and continuing inflationary pressures.
In its press release on Friday, the central bank said economic data since January showed that the impact of the government’s stabilisation measures continued to unfold and show its impact on the economy.
It said that the current account deficit had significantly contracted during the first two months of the year, which, together with bilateral inflows, helped ease pressures on the country’s foreign exchange reserves.
“These developments on the external front have improved stability in the financial markets, reduced uncertainty and improved businesses confidence, as reflected in various surveys. Nonetheless, despite narrowing, the current account deficit remains high, fiscal consolidation is slower than anticipated, and core inflation continues to rise,” it said.