The State Bank of Pakistan left its key policy rate unchanged at 9.75% on March 8th of 2022, saying that the inflation outlook improved following the cuts in energy and electricity tariffs, while economic growth showed signs of moderation towards a more sustainable level.
Thus, demand-side pressures are expected to remain controlled, notwithstanding the uncertainty that arose from the Ukraine-Russia conflict. Policymakers noted that the headline inflation rate in February would have been noticeably lower were it not for extraordinary increases in prices of perishables,
while inflation expectations have remained stable. Looking ahead, the committee views the current level of interest rates as appropriate to guide inflation to the medium-term range of 5 to 7%, although the uncertainty arising from the Ukraine-Russia conflict added risks to the external position of the country and inflation expectations, which could require changes in the policy rate.