KARACHI: Pakistan’s central bank on Tuesday further tightened its monetary stance by raising the key policy rate by 100 basis points to 9.75 percent amid rising inflationary pressure in the economy.
The State Bank of Pakistan (SBP) took the decision after the country’s inflation was recorded at 11.5 percent in November 2021, while core inflation in the urban and rural areas rose to 7.6 and 8.2 percent, respectively.
“At today’s meeting [on Tuesday], the Monetary Policy Committee (MPC) decided to raise the policy rate by 100 basis points to 9.75 percent,” the SBP announced in a statement issued after the policy committee meeting.
“The goal of this decision is to counter inflationary pressures and ensure that growth remains sustainable,” the statement added.
The central bank said the indicators of economic activity had remained robust since its last meeting in November while inflation and the trade deficit had further risen due to high global prices and domestic economic growth.
The SBP expects inflation to average nine to 11 percent due to recent higher than expected outturns during the ongoing fiscal year. The pick-up in inflation has been broad-based, with electricity charges, motor fuel, house rent, milk and vegetable ghee among the largest contributors.
“Looking ahead, based on this momentum and the expected path of energy tariffs, inflation is likely to remain within the revised forecast range for the remainder of the fiscal year,” the statement added.
As global commodity prices retrench, administered price increases dissipate, and the impact of demand-moderating policies materializes, the central bank believes inflation is likely to decline toward the medium-term target range of five to seven percent during FY23.
On the external side, despite record exports, high global commodity prices contributed to a significant increase in the import bill. As a result, the November trade deficit rose to $5 billion based on the data provided by the Pakistan Bureau of Statistics, said the SBP.
The central bank informed the MPC expected monetary policy settings to remain broadly unchanged in the near-term.
It also maintained the economic growth during the current fiscal year was expected to be close to the upper end of the forecast range of four to five percent.
“This projection factors in the expected impact of today’s interest rate decision,” the SBP said, adding: “The emergence of the new Coronavirus variant, Omicron, poses some concerns, but at this stage there is limited information about its severity.”
The bank noted that Pakistan had successfully coped with multiple waves of the virus, which supported a positive outlook for the economy.
Pakistan's central bank raises key policy rate by 1 percent amid rising inflation
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Pakistan's central bank raises key policy rate by 1 percent amid rising inflation
- The State Bank of Pakistan further tightened its monetary stance after the rate of inflation reached 11.5 percent in November
- The central bank expects inflation to average nine to 11 percent this fiscal year due to the recent higher than expected outturns
Pakistan depart for T20 World Cup while waiting for ICC reaction to India game boycott
- Pakistan shook cricketing world when their government approved participation in World Cup, but asked team to boycott India match on Feb. 15
- The ICC has said Pakistan’s ‘position of selective participation is difficult to reconcile with the fundamental premises of a global sporting event’
ISLAMABAD: Pakistan departed for the T20 World Cup in Sri Lanka on Monday and awaited any sanction from the International Cricket Council for refusing to play India in the tournament.
In video footage released by the Pakistan Cricket Board, the cricketers were dressed in their new World Cup kit as they boarded a bus from a hotel to the airport in Lahore.
India is co-hosting the World Cup but Pakistan will play all of its games in Sri Lanka — including any in the knockout stage — because of political tensions with India.
Pakistan shook the cricketing world when its government instructed the team on Sunday to compete in the World Cup but boycott the group game against India in Colombo on Feb. 15. The government did not give a reason on its X account.
The PCB has reportedly not given official notice to the ICC.
The ICC warned Pakistan there will be consequences.
The ICC said “the position of selective participation is difficult to reconcile with the fundamental premises of a global sporting event.” The ICC added Pakistan’s decision was “not in the interest of the global game or the welfare of fans worldwide, including millions in Pakistan.”
Pakistan and India have fought four wars and frequently clash on their border, so their cricket matchups often attract the highest audience and are therefore a significant source of income for broadcasters, sponsors, and the ICC.
They are regularly grouped at ICC tournaments because they have not played a bilateral cricket series for 14 years.
The T20 World Cup starts on Saturday when Pakistan is scheduled to open against the Netherlands.
Pakistan will play a final warmup game against Ireland on Wednesday in Colombo.
After Pakistan wrapped up a 3-0 Twenty20 series win over Australia on Sunday in Lahore, Pakistan captain Salman Ali Agha said he will follow the government’s instructions.
“It’s not our decision (to boycott the India game), we can’t do anything about it,” Agha said. “We will do whatever our government and the (PCB) chairman say.”
PCB chairman Mohsin Naqvi has criticized the ICC for “double standards” by refusing to shift Bangladesh’s games to Sri Lanka after the Bangladesh government didn’t allow its team to travel to India due to security concerns. The ICC axed Bangladesh and replaced it with Scotland for the tournament.
The strained political relations between India and Pakistan spilled onto the cricket field last year when India players refused to shake hands with Pakistan players during three Asia Cup games, including the final, in the United Arab Emirates. Later, India left without the trophy after it refused to accept it from Naqvi, who is the president of the Asian Cricket Council.
