The State Bank of Pakistan (SBP) has announced to increase the benchmark policy rate by 150 basis points to 13.75 per cent to keep inflation expectations anchored and contain risks to external stability.
The country’s central bank issued a statement saying that a meeting of the monetary policy committee decided to raise the policy rate to help moderate demand to a more sustainable pace, reports Xinhua news agency.
Earlier in April, the SBP’s monetary policy committee had a meeting and announced an increase of 250 basis points in the policy rate.
“Since the last meeting, estimates suggest growth in the fiscal year of 2022 has been much stronger than expected. Meanwhile, external pressures remain elevated and inflation outlook deteriorated due to home-grown and international factors,” the bank said in the statement.
It added that demand and lingering policy uncertainty has compounded pressures on the exchange rate.
The SBP also emphasised the urgency of strong and equitable fiscal consolidation to complement monetary tightening actions to help alleviate pressures on inflation, market rates and the external account.