Status quo: SBP keeps policy rate unchanged at 6%

The decision is based on the expectation that there will be reversal in declining momentum of headline inflation

KARACHI: In line with market expectations, the State Bank of Pakistan (SBP) on Saturday decided to keep the policy rate unchanged at 6% for the next two months.

Policy rate is the benchmark interest rate that helps determine the overall cost of funds in an economy.

The central bank adjusts the benchmark interest rate every two months mainly to address price stability and economic growth targets.

The SBP’s decision to keep the rate unchanged is based on its expectation that there will be reversal in the declining momentum of headline inflation in coming months.

Inflation, as measured by the consumer price index (CPI), clocked in at 1.7% in Jul-Oct, which is notably lower than 7.1% recorded in the comparable period of 2014-15.

Majority of analysts expected the SBP to maintain the policy rate at 6%. As many as nine out of the 10 research houses polled by The Express Tribune on November 19 had expected the status quo to prevail in the SBP’s monetary policy.