The Monetary Policy Committee (MPC) of the State Bank of Pakistan has once again decided to maintain the policy rate at seven per cent.
It is the fourth time that the central bank has kept its policy rate unchanged.
“MPC of SBP maintained policy rate at 7pc,” the central bank said in a statement issued on Friday, adding that the current stance of the monetary policy was appropriate to support economic recovery, maintain financial stability and keep inflation expectations “well-anchored”.
MPC viewed recent inflation uptick as primarily driven by supply side factors and saw little signs of demand-led inflation.
“As the temporary increase in inflation from administered prices subsides, inflation should fall to the 5-7pc target range over the medium-term,” the SBP said.
3/3In absence of unforeseen developments, MPC expects mon policy settings to remain broadly unchanged in near term. And as recovery becomes more durable and economy returns to full capacity, any adjustment in policy rate to be measured and gradual to achieve mildly +ve real rates
— SBP (@StateBank_Pak) March 19, 2021
The MPC expects monetary policy settings to remain “broadly unchanged” in the near term, the statement added, emphasising that any adjustment in the policy rate would be measured and gradual to achieve “mildly positive real interest rates” as recovery became more durable and the economy returned to full capacity.
The MPC noted that the monetary policy should be supportive considering the “fiscal policy is expected to remain contractionary to reduce public debt” and from a policy mix perspective.