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SBP raises interest rate by 150 basis points, takes it to 8.75%
KARACHI: State Bank of Pakistan (SBP) Friday announced to raise the interest rate by 150 basis points to 8.75 percent.
KARACHI: State Bank of Pakistan (SBP) Friday announced to raise the interest rate by 150 basis points to 8.75 percent.
The central bank had earlier rescheduled its Monetary Policy Committee (MPC) meeting which was to be held on a later date in light of “recent unforeseen developments that have affected the outlook for inflation and the balance of payments.” It is pertinent to mention here that the US’s Federal Open Market Committee (FOMC) holds eight regularly scheduled meetings per year.
Sharing the details of the monetary policy committee (MPC) from its Twitter handle, the SBP said that the rise in interest rate reflects their view that since the last meeting, risks related to inflation and the balance of payments have increased while the outlook for growth has continued to improve.
1/3 The MPC decided to raise the policy rate by 150 basis points to 8.75%. This reflected their view that since the last meeting, risks related to inflation and the balance of payments have increased while the outlook for growth has continued to improve. https://t.co/qsvs9Z9mh3
— SBP (@StateBank_Pak) November 19, 2021
“This action will bring the frequency of meetings in line with that in comparable emerging markets. It will also help to enhance the predictability of monetary policy actions,” the central bank said.
2/3 With risks rotating from growth to inflation and the current account faster than expected, there is now a need to proceed faster to normalize monetary policy to counter inflation and preserve stability with growth. Today’s rate increase is a material move in this direction.
— SBP (@StateBank_Pak) November 19, 2021
Accordingly, the schedule for the next five MPC meetings is as following:
December MPC meeting: Tuesday, Dec 14, 2021
January MPC meeting: Monday, Jan 24, 2022
March MPC meeting: Tuesday, Mar 8, 2022
April MPC meeting: Tuesday, Apr 19, 2022
June MPC meeting: Friday, Jun 10, 2022
The central bank today increased its benchmark policy rate by 150 basis points to 8.75% largely in line with the market expectation because of risks related to inflation. The advance calendar for the next half-year of MPC meetings will be shared at the time of the June 2022 MPC meeting.
Prior to the announcement of the interest rate, the Pakistani rupee extended losses against the United States (US) dollar in the interbank currency market on Friday.
