KARACHI: Pakistan’s central bank announced on Wednesday it was keeping the interest rate unchanged at 11 percent despite a majority of the economists predicting a rate cut, with analysts linking the “cautious” approach to the government’s aim to ensure price stability amid a surge in energy prices.
The decision came as a surprise after the majority of Pakistan’s economists predicted a reduction of 100 basis points in the policy rate due to easing inflation in the country, which reached 3.2 percent in June.
The central bank kept its benchmark interest rate unchanged for a second consecutive time after slashing it by 1,100 basis points during the last year to keep inflation in check, which had surged to 38 percent in May 2023.
State Bank of Pakistan (SBP) Governor Jameel Ahmad said the decision was based on easing consumer prices as well as core inflation, which otherwise remains “static” but eased to 7.2 percent last month. However, an unexpected hike in energy prices had worsened the inflation outlook.
“The Monetary Policy Committee (MPC) met today and decided to maintain the current policy rate at 11 percent,” Ahmad said at a press briefing in Karachi after the MPC meeting.
