Washington January 21 2024: IMF ask State Bank of Pakistan to increase policy rate if inflation increases, however states current policy rate appropriate given weak demand.
“While staff sees the stance as broadly appropriate at the current juncture given weak domestic demand, the MPC should stand ready to respond resolutely if near-term price pressures reemerge, including due to second-round effects, and ensure that the real policy rate remains in clear positive territory” states IMF in its report.
“Further, it is important to continue work towards improving monetary transmission, including through the gradual phaseout of SBP’s involvement in refinancing schemes, and by strengthening internal control systems around monetary policy lending operations as recommended by the 2023 Safeguards Assessment Report” the report added.
