The policy rate was increased by 100 basis points to 21 percent on Tuesday by the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP), the increase in the policy rate is the highest ever in the history of Pakistan.
The State Bank of Pakistan (SBP) issued a press statement to make the announcement. The Bank stated, "As reported in the most recent MPS, headline inflation increased further on March 23. Although being at high levels, the MPC acknowledged that there are early indicators of inflation expectations plateauing.
In a statement, the MPC said that barring any unexpected shock, "MPC regards today's decision, coupled with the cumulative monetary tightening so far, as adequate to anchor inflation expectations around its medium-term target."
SBP continued, "MPC also underlined that external account vulnerabilities persist in the context of low FX reserves, despite a dramatic reduction in the current account deficit, ongoing debt payments and tightening in global financial conditions"