In the monetary policy committee meeting of the State Bank of Pakistan (SBP), the interest rate has been maintained at 22 percent. Central bank inflation has fallen from a high of 38 percent in May this year and will continue to decline.
According to the monetary policy statement, these factors remained for the committee’s attention after the July meeting. First, satellite data is showing a positive outlook for agriculture. The second is that the global prices of crude oil which have reached 90 dollars. Thirdly, the current account deficit of July, which after being positive for four months, has become negative by 800 million dollars due to import easing.
According to the policy statement, the inflationary scenario was worsened by speculation in foreign exchange and commodity prices, but administrative measures are yielding results.
According to the State Bank, the operation against illegal activities will help to reduce the difference between the dollar and the interbank and open market rates.
According to the statement, the focus is on inflation, decisions will be made as per the need. However, the current rate of interest is apt to bring inflation to 5 to 7 percent by the end of the next fiscal year. The real interest rate is positive relative to future inflation expectations.
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