Karachi: The State Bank of Pakistan has decided to maintain the current interest rate at 22%, adjusting the inflation target for the ongoing financial year from 23% to 25%.
Governor Jameel Ahmad revealed the decision, citing challenges in sustaining inflation reduction due to frequent changes in regulated energy prices. Despite initial projections of 20-22% inflation, the central bank now anticipates an average inflation of 23-25% for the fiscal year.
While grappling with a 29.7% CPI in December, Governor Ahmad expects a decline in January. The SBP, aiming for a medium-term inflation target of 5-7%, now plans to achieve it by September 2025, one quarter later than initially projected.
Despite a 22% interest rate, the central bank faces ongoing challenges in controlling inflation, while non-energy inflation aligns with committee expectations. The committee notes a significantly positive real interest rate based on a 12-month forward-looking basis, considering the expected downward trajectory of inflation.