NEW DELHI: Pakistan’s central bank on Monday raised its key policy rate by 100 basis points (one per cent) to 17 per cent on Monday to tame inflation.
The State Bank of Pakistan (SBP) said its monetary policy committee (MPC) felt it was “critical to anchor inflation expectations and achieve the objective of price stability” to support sustainable economic growth.
Core inflation, which excludes fresh food and energy prices, has been on a rising trend for the past 10 months, the bank noted in a statement.
“The committee noted 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,“ the SBP said.
The central bank last raised its interest rate by one per cent to 16 per cent in November.
The MPC reiterated its November assessment that the short-term costs of bringing down inflation are lower than the long-term costs of allowing it to become entrenched.
Pakistan’s headline inflation rose to 24.5 per cent in December from 23.8 per cent in November.
“Increase in food inflation remains the major contributor to this persistence in inflation,“ the central bank said. – Bernama
