Pakistan central bank raises key rate by 100 bps to contain inflation

Pakistan's central bank on Monday raised key rate by 100 basis points, as widely expected, to 17 per cent in an effort to rein in persistently high inflation and said achieving price stability is key to attaining sustainable growth in the future.

Eighteen of the 22 economists and market watchers surveyed by Reuters had said there would be a hike -- 14 of them predicted 100 basis points (bps), three expected 200 bps while one said 150 bps. Four respondents expected rates to remain unchanged.

"The committee noted that inflationary pressures are persisting and continue to be broad-based. If these remain unchecked, they could feed into higher inflation expectations over a longer than-anticipated period," the statement said.

"The MPC stressed that it is critical to anchor inflation expectations and achieve the objective of price stability to support sustainable growth in the future."

In its last policy meeting in November, the State Bank of Pakistan unexpectedly pushed up the rate by 100 bps to 16 per cent. It has now raised rates by a total of 725 bps since January 2022.