State Bank announces monetary policy, raises interest rate to 12%

The State Bank of Pakistan (SBP) has raised its policy rate to 12% amid concerns over rising energy prices and inflation driven by the ongoing conflict in the Middle East.

Speaking after the monetary policy announcement, SBP Governor Jameel Ahmed said global crude oil prices had crossed $100 per barrel, putting pressure on inflation and affecting the country’s external accounts.

Ahmed said nine of the 10 members of the Monetary Policy Committee (MPC) supported the interest rate hike.

The governor noted that inflation stood at 7.1% last year, while core inflation had improved over the past two months.

He said the ongoing conflict in the Middle East had pushed up energy prices, increasing inflationary pressures. The rise in oil prices had also affected Pakistan’s external accounts, he added.

The central bank said the decision to raise the policy rate was taken in view of prevailing economic conditions and concerns over inflation.