Pakistan increases policy rate by 100 basis points to anchor inflation

ISLAMABAD, Jan. 23– The State Bank of Pakistan on Monday decided to increase the policy rate by 100 basis points to 17 percent as the country continued to be in the grip of high inflation, according to the SBP. The monetary policy committee of the SBP held a meeting on Monday and decided to raise the interest rate, noting that inflationary pressure is persisting and…

ISLAMABAD, Jan. 23 (Xinhua) — The State Bank of Pakistan (SBP) on Monday decided to increase the policy rate by 100 basis points to 17 percent as the country continued to be in the grip of high inflation, according to the SBP.

The monetary policy committee of the SBP held a meeting on Monday and decided to raise the interest rate, noting that inflationary pressure is persisting and continues to be broad-based, the central bank said.

“If these remain unchecked, they could feed into higher inflation expectations over a longer-than-anticipated period,” the SBP said, adding that it is critical to anchor inflation expectations and achieve the objective of price stability to support sustainable growth in the future.

During the meeting, the committee noted that rising inflation over the last 10 months, increased near-term challenges for the external sector, a continuous drawdown in foreign exchange reserves and uncertain global economic and financial conditions led to mixed implications for Pakistan’s economy.

The SBP said the short-term costs of bringing down inflation are lower than the long-term costs of allowing it to become entrenched while emphasizing the engagements with the country’s multilateral and bilateral partners to overcome domestic uncertainty and to address the near-term external sector challenges. Enditem