Overview
- Pakistan’s central bank, which raised the benchmark by 100 basis points on Monday, made its first increase in nearly three years to set the policy rate at 11.50 percent.
- Policymakers cited March inflation at 7.3 percent and core at 7.8 percent and warned that supply shocks to energy and shipping could push prices into double digits in the coming months.
- The central bank highlighted stronger buffers with foreign exchange reserves near $15.8 billion on April 24 and projected above $18 billion by June, backed by Eurobond issuance and an IMF staff-level deal.
- Trade groups including FPCCI and KCCI called the decision ill-timed, saying higher borrowing costs will shut SMEs out of affordable credit, lift production costs, and weaken exporters’ competitiveness.
- The Monetary Policy Committee left the door open to further changes at the next review, saying inflation is likely to stay above the 5 to 7 percent target range for much of the next fiscal year.