The State Bank of Pakistan (SBP) has emphasised that its policy stance is geared towards price stability, contribution to economic growth and development.
In a statement issued on Monday to respond to concerns over its monetary policy decision, the central bank highlighted that getting the balance right through various stages following Covid had been the key goal of the monetary policy.
“In the midst of a once-in-a-century pandemic, it will be imprudent to solely superimpose classical economic theories onto data outturns,” the statement said.
“Policymakers, economists and businesses around the world did not know how the global or domestic economy would evolve in response to mobility restrictions of varying stringencies in different locations.”
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Similarly, there was heightened uncertainty regarding the price-setting behaviour, the SBP stated.
It added that there was an ongoing debate in global policy circles and financial markets over whether the present bout of inflation was transitory in nature or not.
The SBP elaborated that in the face of an unprecedented shock like Covid, invoking supposed historical, textbook patterns of overheating was facile.
Published in The Express Tribune, November 30th, 2021.
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