KARACHI: The State Bank of Pakistan (SBP) on Monday raised its policy rate by 50 basis points to 12 per cent, citing rising energy prices amid the US-Iran war and their impact on the inflation outlook and amid persistent inflationary pressures and rising global oil prices.
Speaking at a press conference after the Monetary Policy Committee (MPC) meeting, SBP Governor Jameel Ahmad said nine of the committee’s 10 members voted in favour of the increase, while one member opposed it.
Ahmad said the committee had assessed the impact of rising oil prices on inflation and reviewed key macroeconomic indicators, including the external account and remittances.
He said the current account position had improved, while the committee had also monitored foreign exchange inflows and remittance trends.
Pakistan received $10.9 billion in remittances during the first quarter of the current fiscal year, according to the governor, who expressed optimism about further improvement in inflows.
He said remittances were expected to reach $45 billion during the current fiscal year.
The governor also noted improvements in a scheme launched by the Pakistan Banks Association to facilitate remittances.
Pakistan’s inflation rate stood at 7.1 per cent, while rising international oil prices have added to concerns about the future inflation trajectory.
The increase in the policy rate marks a tightening of monetary policy as the central bank weighs inflationary pressures against developments in the external account and other economic indicators.
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