Ahmed Mukhtar Naqshbandi
ISLAMABAD: Governor of the State Bank of Pakistan (SBP), Jameel Ahmed, on Monday announced that the Monitory Policy Committee has decided to increase the interest rate by 1 percent to 17 percent.
Addressing a press conference after the Monetary Policy Committee’s (MPC) meeting, the governor said that the committee noted that the inflationary pressure is persistent, therefore price stability is required to control inflation and sustain the growth rate.
He said that there was some delay in dollars inflow which was putting pressure on foreign exchange reserves.
The governor said the committee discussed the global financial situation, including the International Monetary Fund (IMF) and World Bank’s downgrading of the global economic growth rate and the uncertainty prevailing in the markets.
He said that these circumstances affected the markets in Pakistan directly or indirectly and its exports and remittances are also impacted.
Policy rate increased after thorough analysis
The governor said that the MPC took the decision to increase the policy rate after a thorough analysis of the external and financial position of the country.
He said that there were some risks to the GDP growth projection of 2 percent made by the MPC during its last meeting in November, particularly external issues.
He further said that the current account deficit on the external side is likely to be 10 billion dollars this year. The actual performance during the first half of the year is better than expected. The current deficit from July to December stood at 3.7 billion dollars, despite a slowdown in remittances and exports.
He added that it shows “we are within our target”. Now, the current account deficit could be brought down below 9 billion dollars.
