Monetary Policy: SBP maintained the Policy rate at 7%

The Monetary Policy Committee (MPC) decided to maintain the
policy rate at 7 percent. The MPC noted that since the last meeting in September, the domestic recovery has gradually gained traction, in line with expectations for growth of slightly above 2 percent in FY21, and business sentiment has improved further. Nevertheless, there are risks to the outlook.

The recent rise in Covid cases in Pakistan and many other countries presents considerable downside risks. On the upside, while it could take some time to fully implement worldwide, there has been recent encouraging news on vaccine development.

On the inflation front, recent out-turns have been on the higher side, primarily due to increases in food prices. However, these supply-side pressures are likely to be temporary and average inflation is expected to fall within the previously announced range of 7-9 percent for FY21. Taken together, risks to the outlook for both growth and inflation appear balanced.

Given the broadly unchanged outlook for growth and inflation, the MPC viewed the existing stance of monetary policy as appropriate to support the nascent recovery while keeping inflation expectations wellanchored and maintaining financial stability. The MPC noted that the lagged effects of the significant fiscal, monetary and credit stimulus injected during the pandemic should continue to shore up growth in coming quarters

In reaching its decision, the MPC considered key trends and prospects in the real, external and fiscal sectors, and the resulting outlook for monetary conditions and inflation.

spot_img

More like this

Pakistan’s Current account posted a surplus of $128Mn in...

Pakistan’s current account posted a surplus of $128 million in February 2024, in contrast to a revised...

MPC decided to hold the Policy rate steady at...

The Monetary Policy Committee (MPC) decided to hold the policy rate steady at 22 percent in its...

Weekly SPI surged by 1.11%

The Weekly Sensitive Price Indicator (SPI) significantly increased by 1.11% WoW during the week ended March 07,...