In surprise move, State Bank hikes interest rate to 16pc

KARACHI: The State Bank of Pakistan (SBP) Friday raised its benchmark interest rate by 100 basis points (bps) to 16 percent — the highest ever since 1999 — in a bid to curb the soaring inflation.

In its last two meetings in October and September, the central bank had left the rate unchanged.

The SBP has increased the policy rate by a cumulative of 625 bps in 2022, including the latest hike. This time, the SBP has surprised the market participants and analysts by raising rates as the economy battles to recover from devastating floods.

“This decision reflects the MPC’s [Monetary Policy Committee] view that inflationary pressures have proven to be stronger and more persistent than expected,” the central bank said in a statement.

“It is aimed at ensuring that elevated inflation does not become entrenched and that risks to financial stability are contained, thus paving the way for higher growth on a more sustainable basis,” it added.

The SBP cited risks of high inflation becoming persistent due to a rise in cost-push inflation as justification for increasing the interest rates at the highest rate in 23 years, despite the fact that the economy has slowed down.

The global and domestic supply shocks are spilling over into broader prices and wages, which could de-anchor inflation expectations and undermine medium-term growth, it said.

Related posts

Today was a negative trading day on the Pakistan Stock Exchange

Daily News

Gas crisis intensifies in Sindh, supply to private power plants suspended

Daily News

In the interbank, the dollar reached the highest level in the country’s history at 230 rupees

Daily News

OGRA’s explanation regarding increase in prices of petroleum products

Daily News

Price of one tola of gold remains at Rs 147100

Daily News

Transfer of orders from India, Bangladesh, Pakistan’s textile exports expected to increase record: Bloomberg

Daily News

Leave a Comment