SBP Maintains 22% Interest Rate

SBP Maintains 22% Interest Rate

Islamabad: : The State Bank of Pakistan (SBP) has announced to maintain the interest rates at just 22%. In the meantime, SBP will also be adjusting the inflation target from 23-25% for the current fiscal year. SBP Governor, Jameel Ahmed stated that the Monetary Policy Committee (MPC) has opted to maintain the 22% interest rate due to a decrease in energy prices.
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The SBP has revised the interest rates for FY24citing higher interest rates in the first half of 2024 but the decline is expected in the second half of the year. These trends could potentially raise the inflation in the country up to 22%. This also means that inflation will remain a headache for the upcoming elected government in 2024. However, a notable downward trend has also been predicted in 2025.
On the other hand, the main inflation CPI stood at 29.7% in December 2023. SBP has recently been struggling to manage inflation while maintaining the interest rates. But the time will tell how long SBP could maintain the balance. Governor State Bank also highlighted that the last medium-term inflation targets of 5-7% was predicted to be achievable by the middle of 2025. But now this target has been revised for September 2025 rather than June of the same year. However, the entity also offered satisfactory views about a 12-month positive outlook.
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