Karachi January 24 2022: Headline and core inflation rose in December, both the sequential momentum of inflation and inflation expectations of businesses fell significantly, says SBP report on monetary policy.
Together with low base effects, one-off cost-push pressures from energy tariff increases and the removal of tax exemptions in the Finance (Supplementary) Act are likely to keep year-on-year inflation elevated over the next few months, close to the upper end of the average inflation forecast of 9-11 percent in FY22.
However, during FY23, inflation is expected to decline toward the medium-term target range of 5-7 percent more quickly than previously forecasted as demand-side pressures wane faster due to the Finance (Supplementary) Act and recent moderation in economic activity indicators.
The SBP will continue to carefully monitor developments affecting medium-term prospects for inflation, financial stability, and growth.
During the first half of FY22, private sector credit cumulatively grew by 13.4 percent, largely driven by increased demand for working capital loans especially by rice, textile, petroleum and steel industries. Since the last month, both short and long-term secondary market yields, benchmark rates and cut-off rates in the government’s auctions declined significantly and the conduct of 2-month open market operations by the SBP.
