Pakistan’s central bank on Monday held its key interest rate at 22 per cent as expected for a sixth straight policy meeting as inflation risks continued to loom.

The decision was in line with the expectations of a majority of analysts, although most are also expecting rate cuts from the second quarter of this year.

The bank said that although the inflation rate had eased in February, it remained high and subject to risks.

“This warrants a cautious approach and requires continuity of the current monetary stance to bring inflation down to the target range of 5-7 percent by September 2025,” the State Bank of Pakistan’s (SBP) monetary policy committee said in a statement.

Monday’s policy decision is the last ahead of the April expiry of a $3 billion standby arrangement with the International Monetary Fund.

Pakistan’s key rate was last raised in June to fight persistent inflationary pressures and to meet one of the conditions set by the IMF for securing the critical bailout.

The bank noted the improved inflation figures in February, when the country’s consumer price index rose 23.1% year on year, its slowest since June 2022, partly due to the “base effect”.

But it noted that “going forward, any further adjustments in administered prices or fiscal measures that may push prices up pose risk to the near and medium-term inflation outlook.”

“Cognizant of these risks, the Committee assessed that it is prudent to continue with the current monetary policy stance at this stage,” the statement added.

In its last decision in January, the central bank had raised the average inflation forecast for the fiscal year ending in June to 23%-25%, from a previous projection of 20%-22%, due to rising gas and electricity prices.

Monday’s policy decision is the last ahead of the April expiry of a $3 billion standby arrangement with the International Monetary Fund.

Pakistan’s key rate was last raised in June to fight persistent inflationary pressures and to meet one of the conditions set by the IMF for securing the critical bailout.

Inflation hit an all-time high of 38% in May last year, driven partly by new taxation measures imposed to comply with IMF’s demands for a rescue programme that helped the nation avert a sovereign debt default. The 100-index of the pakistan Stock Exchange (PSX) witnessed bullish trend on Monday, gaining 74.04 points, a positive change of 0.11 percent, closing at 64,890.51 points against 64,816.47 points the previous trading day.

A total of 211,758,341 shares valuing Rs.7.785 billion were traded during the day as compared to 259,373,019 shares valuing Rs.10.120 billion the last day. Some 313 companies transacted their shares in the stock market; 149 of them recorded gains and 160 sustained losses, whereas the share prices of 4 remained unchanged.

 The per tola price of 24-karat gold decreased by Rs600 and was sold at Rs226,900 compared to its sale at Rs227,500 on last trading day.

 The price of 10g of 24-karat gold also decreased by Rs515 to Rs194,430 from Rs195,045 whereas the price of 10g 22-karat gold went down to Rs178,319 from Rs178,791. The price of per tola silver decreased by Rs20 to Rs2,580 whereas that of 10g silver declined by Rs17.15 to Rs2,211.93. The price of gold in the international market decreased by US$5 to US$2,170 from US$2,175.

 The pakistani rupee strengthened by 11 paisa against the US dollar in the interbank trading and closed at Rs278.63 against the previous day’s closing of Rs278.74. The buying and selling rates of the dollar in the open market stood at Rs 278.7 and Rs 281.3, respectively.

 The price of the Euro increased by 19 paisa to close at Rs 303.51 against the last day’s closing of Rs 303.32. The Japanese Yen came down by 01 paisa and closed at Rs1.86, whereas a decrease of 17 paisa was witnessed in the exchange rate of the British Pound, which was traded at Rs355.00 compared to the last closing of Rs355.17. The Emirates dirham and the Saudi riyal also decreased by 02 paisa and 03 paisa to closed at Rs 75.87 and Rs74.29.

Reuters