Pakistan Interest Rate2022 Data - 1992-2021 Historical - 2023 Forecast - Calendar

The State Bank of Pakistan raised its key policy rate by 125bps to 15% on July 7th meeting, to fight the surging inflation amid sharp depreciation of the rupee. It was the sixth rate-hike since the monetary board started policy normalization process in September last year, pushing the borrowing costs the highest since April of 1999. Domestically, as energy subsidies were reversed, both headline and core inflation increased to a 14-year high. Further, the central bank reiterated that headline inflation is likely to remain elevated around current levels for much of FY23 before falling sharply to the 5-7% target range by the end of FY24, driven by tight policies, normalization of global commodity prices, and beneficial base effects. Also, the Monetary policy committee noted that higher rate should help cool economic activity, prevent a de-anchoring of inflation expectations and provide support to the rupee in the wake of multi-year high inflation and record imports.

The State Bank of Pakistan hiked its key policy interest rate by 150 basis points to 13.75% during its May 23rd meeting, to preserve price and foreign exchange stability amid a sharp devaluation of the rupee. The monetary policy committee reiterated that external pressures remain elevated, and the inflation outlook has deteriorated due to both home-grown and international factors. However, the economy has rebounded much more strongly than anticipated, growing by 5.7 percent last year and accelerating to 5.97 percent this year, as per provisional estimates. Further, it assumes continued engagement with the IMF, as well as reversal of fuel and electricity subsidies together with normalization of the petroleum development levy (PDL) and GST taxes on fuel during FY23. Under these assumptions, headline inflation is likely to increase temporarily and may remain elevated throughout the next fiscal year, however it is expected to fall to the 5-7 percent target range by the end of FY24.

The State Bank of Pakistan hiked its key policy interest rate by 250 basis points to 12.25% at an unscheduled meeting on April 7th of 2022, in an attempt to preserve price and foreigne exchange stability amid a sharp devaluation of the rupee. The monetary policy committee said it was caught off guard by the US Fed’s tightening plans and inflationary pressures, as well as domestic political uncertainty, which could escalate into an economic crisis. Policymakers added that now, real interest rates were mildly positive and that the central bank held its stance to curb inflationary pressures and the deterioration of the country’s current account. Updated forecasts showed inflation was revised upwards to 11% in the current fiscal year, while the current account deficit forecast was unchanged ay 4% of GDP.