By Gibran Naiyyar Peshimam
KARACHI, Pakistan (Reuters) – Pakistan’s central bank kept its key rate unchanged at 22% on Monday after a scheduled meeting of its monetary policy committee, the bank’s governor said at a press conference.
However, central bank chief Jameel Ahmad said that inflation would gradually decline in coming months and that the inflation outlook for the next fiscal year was between 20% and 22%.
The meeting was the first since a new $3 billion bailout was approved by the International Monetary Fund (IMF) earlier this month for the ailing economy that was teetering on the brink of a global debt default.
The IMF had said following the bailout that the bank must continue with its monetary tightening cycle to tame inflation.
The State Bank of Pakistan (SBP) has raised its key policy rate by 12.25 percentage points since April 2022, to curb soaring inflation.
The rise in the consumer price index rise slowed in June from a record high of 38% year on year in May, but remained elevated at 29.4%. The CPI index decreased 0.3% in June from May.
The government projects inflation to average 21% for the current fiscal year that started on July 1. The IMF however, projects inflation at 25.9% for the same period.
Pakistan’s central bank raised the key rate by 100 basis points to 22% in an off-cycle meeting in June just weeks after having held rates at a scheduled meeting.
Pakistan’s government said the rates had been increased on the IMF’s demand in the lead up to the approval of the new bailout agreement.
(Reporting by Gibran Peshimam; Writing by Swati Bhat; Editing by Bernadette Baum)
