The State Bank of Pakistan (SBP) Monday maintained the status quo in the interest rate at 15% — the highest since November 2008.

The monetary policy committee (MPC) met under the chair of Deputy Governor Syed Murtaza and reviewed the economic indicators. Despite record high inflation the central bank decided to keep the interest rate unchanged for the next six weeks.

The central bank had cumulatively increased the rate by 800 basis points from September 2021 to July 2022 to control inflation and narrow the current account deficit. However, the central bank kept the interest rate unchanged in today's meeting for the next six weeks.

“With recent inflation developments in line with expectations, domestic demand beginning to moderate & the external position showing some improvement due to a lower trade deficit and resumption of the IMF program, the MPC felt that it was prudent to take a pause at this stage,” said SBP in a statement.

“This pause allows MPC to assess impact of 800bps tightening since Sept & fiscal consolidation planned for FY23. It is also in line with recent actions by other EM central banks, who have been holding rates in recent meetings as global growth & commodity prices have slowed.”

The Central Bank said to contain external pressures and support the Rupee going forward, it is important to contain the current account deficit by delivering the budgeted fiscal consolidation, lowering energy imports through energy conservation measures, and keeping the IMF program on-track.

“Looking ahead, the MPC intends to remain data-dependent, paying close attention to month-on-month inflation, inflation expectations, developments on the fiscal and external fronts, as well as global commodity prices & interest rate decisions by major central banks,” added SBP