The State Bank of Pakistan has announced a new monetary policy and decided to maintain interest rates at 7%.
The monetary policy statement issued by the SBP said that the interest rate has been maintained at 7%. Further said, the production of major industries is increasing, international crude oil prices have increased. Moreover, electricity, sugar and wheat prices have pushed up inflation.
Earlier, on January 22, 2021, the Governor SBP had announced to keep the interest rate at 7% while announcing the Monetary Policy Committee. The SBP governor, Dr Raza Baqir said that monetary policy would remain at the same level in the coming days. If need, we will raise interest rates appropriately. Inflation is likely to be 7 to 9 percent.
Continuing, he said that the country’s economic situation is improving, but not the improvement they want to see. Dr Raza Baiq said, we decided to maintain interest rates to control inflation.
He said that the rise in electricity or international oil prices was temporary and the rise in food prices was also temporary, so the committee was of the view that there was no need to change interest rates because of them. Rising electricity prices are likely to push up inflation.
He said that the Monetary Policy Committee was of the view that there was no pressure on demand as our capacity was not fully utilized and there was a balance in forecasting inflation. Dr Raza Baqir said that for all these reasons, the Monetary Policy Committee should keep an eye on the economic situation. He was of the view that the situation is getting better than before. Still not in line with the nation’s expectations.