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State Bank Increased Monitory Policy Rate To 12.25 %

The State Bank of Pakistan hiked its key policy interest rate by 250 basis points to 12.25% at an unscheduled meeting on April 7th of 2022, in an attempt to preserve price and foreigne exchange stability amid a sharp devaluation of the rupee.

The monetary policy committee said it was caught off guard by the US Fed’s tightening plans and inflationary pressures, as well as domestic political uncertainty, which could escalate into an economic crisis.

Policymakers added that now, real interest rates were mildly positive and that the central bank held its stance to curb inflationary pressures and the deterioration of the country’s current account.

Updated forecasts showed inflation was revised upwards to 11% in the current fiscal year, while the current account deficit forecast was unchanged ay 4% of GDP.