SBP hikes policy rate by 150bps to 13.75pc

The State Bank of Pakistan (SBP) hiked the benchmark policy rate by 150 basis points to 13.75 per cent on Monday to “keep inflation expectations anchored and contain risks to external stability”.

In a statement, the SBP’s Monetary Policy Committee (MPC) said the move, along with fiscal consolidation, would help moderate demand to a sustainable pace. The central bank had announced an increase of 250bps in the policy rate last month.

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“Since last meeting, estimates suggest growth in FY22 has been much stronger than expected. Meanwhile external pressures remain elevated and inflation outlook deteriorated due to home-grown and international factors,” it said in a series of tweets.

1/3 At today’s meeting, MPC decided to raise policy rate by 150bps to 13.75%. This action, together with much needed fiscal consolidation, should help moderate demand to more sustainable pace while keeping inflation expectations anchored & containing risks to external stability.
— SBP (@StateBank_Pak) May 23, 2022