State Bank monetary policy announcement, interest rate increase by one percent

The prime interest rate reached a record high of twenty-two percent

The State Bank of India hiked interest rates by 1 percent, after which the prime rate in Pakistan reached a record high of 22 percent.

A meeting of the State Bank's Monetary Policy Committee was convened for the second time this month, in which the country's economic situation was reviewed and the monetary policy was approved for the next one and a half months, and a policy statement was issued.

1/3 MPC of #SBP convened an emergency meeting today, where it noted that potential upside risks to the inflation outlook have increased from the last meeting, and accordingly decided to raise the policy rate by 100bps to 22%.https://t.co/unuS6xmJHz#SBPMonetaryPolicy pic.twitter.com/FWenKLqdkt

— SBP (@StateBank_Pak) June 26, 2023

According to State Bank, in the meeting, it has been decided to increase the interest rate by 100 basis points i.e. 1 percent, after which the base interest rate has become 22 percent.

According to the State Bank, the inflationary scenario in the country has worsened, which may increase the pressure on the external account, some increases in taxes, duties, and PDL rates have been made in the budget.

According to the statement, the central bank has withdrawn its guidance to commercial banks on import preferences, adding to the upside risks to the inflationary scenario. But the easing of restrictions could put pressure on the foreign exchange market.