The State Bank of Pakistan (SBP) has announced to maintain the policy rate at 15 per cent as part of its monetary policy.
“Based on currently available information, the gross domestic product (GDP) growth could fall to around 2 per cent in the fiscal year (FY) 2023 (from July 2022 to June 2023), compared to the previous forecast of 3 to 4 per cent as the recent floods have altered the macroeconomic outlook,” the SBP said in its monetary policy statement on Monday.
The central bank noted the continued deceleration in economic activity as well as the decline in headline inflation and the current account deficit, reports Xinhua news agency.
It added that the existing monetary policy stance strikes an appropriate balance between managing inflation and maintaining growth in the wake of the floods.
The impact on the current account deficit is likely to be muted, with pressures from the domestic market importing high-priced food and cotton largely offset by slower domestic demand and lower global commodity prices, according to the central bank.
The SBP said that the growth prospects have weakened in the country, which will reduce demand-side pressures and suppress underlying inflation.
In light of these offsetting considerations, the bank considered it prudent to leave monetary policy settings unchanged at this stage, according to the statement.