Pakistan central bank raises key policy rate by 300 bps to 20 percent

The logo of the State Bank of Pakistan (SBP) is pictured on a reception desk at the head office in Karachi, Pakistan July 16, 2019. (Photo courtesy: REUTERS/FILE)
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Updated 02 March 2023
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Pakistan central bank raises key policy rate by 300 bps to 20 percent

  • Key rate of the State Bank of Pakistan now stands at 20 percent, highest level since October 1996
  • In January, bank raised rate by 100 bps to 17 percent but has now raised rates by total of 1025 bps

KARACHI: Pakistan’s central bank raised its key interest rate by 300 basis points on Thursday, exceeding investor expectations, as the cash-strapped country attempts to encourage the International Monetary Fund to release critical funding.

The key rate of the State Bank of Pakistan (SBP) now stands at 20 percent, its highest level since October 1996. Investors polled by Reuters had expected a rate hike of 200 bps.

The central bank had brought forward its policy meeting from an original date of March 16, with local media saying the rate hike was a key requirement to get the IMF funding released.

In its last policy meeting in January the bank raised the rate by 100 bps to 17 percent. It has now raised rates by a total of 1025 bps since January 2022.

“The MPC noted that the recent fiscal adjustments and exchange rate depreciation have led to a significant deterioration in the near term inflation outlook and a further upward drift in inflation expectations, as reflected in the latest wave of surveys,” the central bank said in a statement.


Suicide bomber attacks security check post in northwestern Pakistan, kills civilian

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Suicide bomber attacks security check post in northwestern Pakistan, kills civilian

  • Sixteen civilians, two security personnel wounded in blast near the Afghan border town of Miran Shah
  • Attack comes amid rising militancy as Pakistan steps up military campaign across the Afghan border

PESHAWAR: A vehicle-borne suicide bomber targeted a security check post in Pakistan’s northwestern district of North Waziristan on Friday, killing at least one civilian and wounding 16 others, several critically, police and hospital officials said.

The attack struck the Chashma Sarband check post on the Bannu–Miran Shah road in Miran Shah, the main town in the restive tribal district bordering Afghanistan, police said.

The blast comes amid a resurgence of militant attacks in Pakistan’s northwestern border regions and growing tensions with neighboring Afghanistan, where Islamabad says armed groups responsible for violence in Pakistan are based.

“Sixteen civilians were among those wounded, four of whom were in critical condition,” said Dr. Asif Iqbal, the medical superintendent at the district headquarters hospital in Miran Shah.

“One person has died at the hospital,” he said, adding that more injured victims were expected to be brought in.

Police spokesman Fazal Khan said the vehicle-borne suicide attack targeted the security checkpoint along the busy highway.

Two members of the security forces were also wounded in the explosion, he said.

Chief Minister of Khyber Pakhtunkhwa Sohail Afridi condemned the attack and ordered authorities to submit a report on the incident.

“The incident in which civilians were injured in the Miran Shah Chashma check post explosion is tragic,” he said in a statement.

Afridi directed officials to ensure the best possible medical treatment for the injured and said emergency services and hospital staff had been placed on high alert.

“Cowardly acts of terrorism cannot weaken the resolve of the government and the public,” he added.

Pakistan has witnessed a rise in militant violence in recent months, particularly in regions bordering Afghanistan, where officials say groups such as the Tehreek-e-Taliban Pakistan (TTP), also known as the Pakistani Taliban, operate from bases across the frontier.

Islamabad accuses Afghanistan’s Taliban authorities of sheltering militants who carry out attacks inside Pakistan, a charge Kabul denies.

The tensions have escalated further after Pakistan launched air strikes inside Afghanistan earlier this year targeting what it described as militant camps, triggering cross-border clashes between the two neighbors and prompting Islamabad to expand military operations along the frontier.

Pakistan says the campaign, dubbed “Ghazab Lil Haq,” will continue until militant threats from across the border are neutralized.