KARACHI: In its meeting today, the MPC noted that in line with earlier expectations, inflation has started to decline noticeably from H2-FY24. It also stated that, despite the sharp slowdown in February, the level of inflation remains high and its outlook is prone to risks with increased inflation expectations.
Citing indicators, the central bank’s committee decided to continue with the current monetary policy, which calls for reducing inflation to a target range of 5-7% by September 2025.
According to the SBP statement, the MPC reiterated that this assessment is also conditional on continued targeted fiscal consolidation and timely realization of planned external inflows.
The Committee also discussed several key developments since its last meeting that have implications for the macroeconomic outlook.
First, the latest data continues to show a modest recovery in economic activity, led by a recovery in agricultural production.
Second, the external current account balance is performing better than expected and has helped maintain foreign exchange reserves despite weak financial inflows.
Third, while business inflation expectations have shown steady growth since December, consumer inflation expectations also increased in March.
Finally, on the global front, while the broader trend in commodity prices remained favorable, oil prices rose; partially reflecting the ongoing tensions in the Red Sea.
Furthermore, amid uncertainty about the inflation outlook, key central banks in both advanced and emerging economies have continued to maintain a cautious monetary stance in recent sessions.
