Karachi – The State Bank of Pakistan has decided not to cut interest rates and has maintained them at 11.5%. Seven out of 10 members of the central bank’s Monetary Policy Committee voted in favour of maintaining the current rate.
According to the committee, there are some signs of improvement in the country’s economy, but global conditions have created new difficulties for policymakers. Especially due to the ongoing war in the Middle East, the pressure on the prices of raw materials and other goods has increased globally.
This situation is having a significant impact on the supply chain. As barriers to global trade have not been completely eliminated, risks regarding import costs and prices remain.
On the other hand, inflation in Pakistan has also shown renewed pressure. According to official data, inflation reached 11.1% on an annual basis in August, while the rate was 9.2% in July. This increase in inflation has become a key factor in the central bank’s policy decisions.
Nevertheless, the external sector situation remained relatively good. Strong remittances from overseas Pakistanis supported the external account. This has helped to contain external pressures on the economy.
The Monetary Policy Committee said that economic activity is also gradually moving forward. It believes that the current interest rate is adequate to bring inflation back to the target of 5 to 7 percent in the medium term.
However, the central bank has described global and regional conditions as a major risk for the future. Increased geopolitical tensions could affect the prices of energy, raw materials and imported goods.
Therefore, the committee has stressed the need to continue a cautious economic policy. According to the central bank, in the current situation, it is necessary to maintain strong economic buffers to deal with possible supply shocks.
The State Bank once again clarified that a change in interest rates alone will not solve the fundamental problems of the economy. Implementation of structural reforms is also necessary for stable and sustainable economic growth in the long term.
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