The Monetary Policy Committee (MPC) of the State Bank of Pakistan has kept the interest rate unchanged at 22%.

The Pakistani business community and the general public eagerly waited for the outcome of the Monetary Policy Committee (MPC) meeting in Karachi.

The announcement was made Monday afternoon.

The MPC said that the interest rate will remain unchanged for the next 45 days.

The penal took into account inflation that hovered around 20.7% in March 2024.

Speculation was rife, with opinions divided on the MPC’s likely course of action. Reports from two Pakistani brokerage houses suggest a slight majority predict the committee will maintain the status quo, while others anticipate a “symbolic” rate cut of up to 100 basis points.

Pakistan has held its interest rate at a high of 22% since June in a bid to curb inflation.

While recent months have seen a deceleration in inflation, prompting hopes for a monetary easing cycle, many already believed the State Bank of Pakistan (SBP) would err on the side of caution. This cautious approach is likely influenced by Pakistan’s pending final tranche of the Stand-By Arrangement (SBA) with the International Monetary Fund (IMF) and ongoing negotiations for a more extensive program.

Adding to the complexity, the US Federal Reserve is also meeting today, although an interest rate cut from them is considered unlikely. Central banks in many countries are waiting for a decision from the Feds.

The MPC’s decision will have significant implications for the Pakistani economy, impacting borrowing costs, investment decisions, and overall economic activity.