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SBP jacks up policy rate to 17% — highest since October 1997

In line with the market expectations, the State Bank of Pakistan (SBP) on Monday jacked up the benchmark interest rate by 100 basis points to 17% — the highest since October 1997 — to fight the wild inflationary fires spreading across the country.

SBP Governor Jameel Ahmad, in his maiden monetary policy press conference after assuming charge in August, revealed that the committee has observed that “inflationary pressures are persisting and continue to be broad-based”.

“If these remain unchecked, they could feed into higher inflation expectations over a longer than-anticipated period therefore the Monetary Policy Committee (MPC) stressed that it is critical to anchor inflation expectations and achieve the objective of price stability to support sustainable growth in the future,” he further explained.

The central bank raised the benchmark interest rate by 100 basis points (bps) today taking the total increase to 750bps since January 2022 to counter rising inflation.

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