As expected the State Bank of Pakistan (SBP) on Tuesday increased policy rate by 100bps to record high of 21 per cent.
In a statement after a meeting of its Monetary Policy Committee (MPC), the central bank said: “The MPC noted that inflation in March 2023 rose further to 35.4 per cent, and is expected to remain high in the near term. However, there are early indications of inflation expectations plateauing, albeit at an elevated level.”
On March 2, the central bank raised its key rate by a whopping 300 basis points to a record-high level of 20 per cent apparently in attempt to meet a key requirement of the International Monetary Fund (IMF) for the release of its pending bailout funds.
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Analysts expect further monetary tightening in the meeting as the inflation is still going unbridled and over economic outlook of the country is gloomy.
Inflation measured by the Consumer Price Index (CPI) reached an all-time high of 35.37 per cent year-on-year (YoY) in March, revealed data issued by the Pakistan Bureau of Statistics (PBS) on Saturday.
This is the highest CPI increase on record since July 1965, according to the investment firm Arif Habib Corporation.
In March 2022, inflation was recorded at 12.72pc. Prices in urban and rural areas increased 32.97pc and 38.88pc year-on-year, respectively.
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