Karachi: State Bank of Pakistan’s Monetary Policy Committee announced maintaining status quo, leaving key (bps) policy rate unchanged at 22 percent. MPC’s decision to maintain key policy rate unchanged for fifth time in row-is in line with market expectations as high inflation persists due to rise in energy prices.

In concerning update, SBP Governor Jameel Ahmad stated during press conference that inflation remains elevated, necessitating an upward revision of annual target to 23-25 percent.

Governor said decision was warranted due to “Elevated” inflation, but that rate in January was expected to ease from previous month when it was 29.7 percent.

“SBP opted for wait and see approach during this policy (meeting) and refrained from abruptly starting monetary easing cycle,” said Tahir Abbas, head of research at Arif Habib Limited.

“Economic indicators are gradually improving and inflation is expected to decline significantly from March 2024 onwards, where we believe that SBP is expected to start monetary easing cycle,” he said. Despite negative real rates, business community had been pushing for rate cut for some respite amidst economic challenges.

Published in The Daily National Courier, January, 30 2024

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