KARACHI: Pakistan’s central bank raised its key interest rate by 300 basis points on Thursday, exceeding investor expectations, as the cash-strapped country attempts to encourage the International Monetary Fund to release critical funding.
The key rate of the State Bank of Pakistan (SBP) now stands at 20 percent, its highest level since October 1996. Investors polled by Reuters had expected a rate hike of 200 bps.
The central bank had brought forward its policy meeting from an original date of March 16, with local media saying the rate hike was a key requirement to get the IMF funding released.
In its last policy meeting in January the bank raised the rate by 100 bps to 17 percent. It has now raised rates by a total of 1025 bps since January 2022.
“The MPC noted that the recent fiscal adjustments and exchange rate depreciation have led to a significant deterioration in the near term inflation outlook and a further upward drift in inflation expectations, as reflected in the latest wave of surveys,” the central bank said in a statement.
