Thursday, September 29

Pakistan central bank holds rates at 15%

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KARACHI — Pakistan’s central bank on Monday held its main policy rate at 15%, the bank said in a statement, flagging it would closely watch inflation data and global commodity prices.

“Looking ahead, the MPC (monetary policy committee) intends to remain data-dependent, paying close attention to month-on-month inflation … as well as global commodity prices and interest rate decisions by major central banks,” the State Bank said in a statement.

The decision, which was largely in line with analysts’ expectations, came after the bank hiked rates by 125 basis points at its previous policy meeting in July as the country experienced surging inflation.

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Pakistan is in economic turmoil with fast depleting foreign reserves, an historic depreciation of the rupee against US dollar and soaring inflation.

The decision comes ahead of an crucial meeting by the International Monetary Fund (IMF) in Washington next week, at which the bank said it was expected to approve $1.2 billion tranche of lending.

Pakistan’s annual consumer price inflation reached 24.9% in July, the highest in 14 years, according to the country’s statistics bureau.

However, the bank said in its decision that there were signs that inflationary demand pressures were easing, which justified holding rates steady.

“With recent inflation developments in line with expectations, domestic demand beginning to moderate and the external position showing some improvement, the MPC felt that it was prudent to take a pause at this stage,” the bank said. (Reporting by Syed Raza Hassan, Asif Shahzad and Gibran Peshimam; Writing by Charlotte Greenfield; Editing by Toby Chopra)