The State Bank of Pakistan (SBP) has increased 150 basis points in its interest rate as the Monetary Policy announced for the next two months on Monday (today).
The analysts before announcement of the policy were expecting 125 basis points hike in the new policy.
The interest rate has reached to 12.25 percent in the new monetary policy from existing 10.75 pct. It has now reached to the highest level in the past six years.
The bank’s policy rate has now increased by 6.5 percent since January 2018.
Pakistan is facing a crunch economic situation currently and the rising of the US dollar against rupee has doubled the economic woes of the government.
According to media reports, the central bank governor Reza Baqir had assured the businessmen earlier that the free fall of exchange rate would not be allowed.
On exchange rate, the SBP governor had assured the meeting that the free fall of exchange rate would not be allowed as equilibrium was almost achieved.
The SBP governor said this in a meeting of businessmen with Prime Minister Imran Khan.
The focus for the general public in a new monetary policy of the state bank remains the extent of change in the interest rate.
Prior to the announcement, the Monetary Policy Committee (MPC) chaired by Governor SBP Reza Baqir met for detailed deliberations on economic indicators to decide the key policy rate.
The monetary policy provides brief picture of the national economy and the future economic developments and targets calling for a hike or decrease in the policy discount rate.
