The Monetary Policy Committee (MPC) of State Bank of Pakistan decided to maintain the policy rate at 7 percent, reported 24NewsHD TV channel on Monday.

The MPC noted that since the last meeting in September, the domestic recovery has gradually gained traction, in line with expectations for growth of slightly above 2 percent in FY21, and business sentiment has improved further. Nevertheless, there are risks to the outlook.

The recent rise in Covid cases in Pakistan and many other countries presents considerable downside risks.

On the upside, while it could take some time to fully implement worldwide, there has been recent encouraging news on vaccine development, the Central Bank said.

On the inflation front, recent out-turns have been on the higher side, primarily due to increases in food prices.

However, these supply-side pressures are likely to be temporary and average inflation is expected to fall within the previously announced range of 7-9 percent for FY21. Taken together, risks to the outlook for both growth and inflation appear balanced, the state bank said in a statement issued.

“Recent data suggested a further strengthening and broadening of the recovery observed since July, led by construction and manufacturing,” the statement reads.

The State Bank of Pakistan said sales of Fast Moving Consumer Goods (FMCGs) rebounded in FY21 Q1, average sales volumes of POL and automobiles have surpassed their pre-Covid levels of FY20, and cement sales are at an all-time high.