Pakistan Central Bank Holds Interest Rate At 7% As Outlook Improves

The central bank had slashed rates by 625 basis points in the three months to June, the most pronounced cuts in its history, as the pandemic hit the South-Asian nation.

The bank said that economic growth was expected to pick up to around 2% in the financial year 2021, compared to a contraction of 0.4% in the year ended June.

The decision was largely in line with expectations that the bank would ease off its dovish stance due to the rosier economic outlook while being mindful of the risks to inflation, which had ticked higher in June and July after it cut rates.

“As expected rates remain unchanged, (the) SBP highlighted risks to inflation while economic recovery this year can lead to GDP growth of more than 2%,” said Mohammad Sohail, head of Topline Securities.