The State Bank of Pakistan has announced its latest monetary policy hike by 100 points to 21%.

The new rate is once again the highest in the country’s history and is part of the measures that the central bank is taking to fight historical levels of inflation.

“The MPC noted that inflation in March 2023 rose further to 35.4 percent, and is expected to remain high in the near term,” the statement said.

“The MPC views today’s decision as an important step towards anchoring inflation expectations around the medium-term target, which is critical for achieving the objective of price stability.”

Even though the current account deficit has ‘considerably’ narrowed, pressures on the country’s foreign exchange reserves are likely to continue.

All signs point to a broad slowdown in the economy and the statement cites a decrease in sales of automobiles and decrease in large-scale manufacturing as key examples.

This is the second session of the committee that was preponed from April 27. Earlier a meeting scheduled for March 16 had been preponed to March 2 and had announced the rate hike to 20%.

The last hike had come amid reporting that the higher interest rate was one of the few remaining hurdles in the way of the successful resumption of the IMF program. However, despite the rate increase and other measures the bailout has not yet materialised.