Pakistan central bank holds key policy rate at 22%

Battling inflation and limited foreign exchange reserves, the cash-strapped South Asian nation is trying to navigate a path to economic recovery under a $3 billion standby arrangement with the IMF secured last summer to avert a sovereign default, and is hoping to sign a longer term programme. Pakistan's key rate was last raised in June to fight persistent inflationary pressures and to meet one of the conditions set by the IMF for securing the bailout.

(Adds background in paragraphs 2-4) KARACHI, April 29 (Reuters) -

Pakistan's central bank kept its key interest rate unchanged at 22% for the seventh straight policy meeting, it said on Monday, hours before the International Monetary Fund executive board will meet to discuss the approval of $1.1 billion in funding for Pakistan. Battling inflation and limited foreign exchange reserves, the cash-strapped South Asian nation is trying to navigate a path to economic recovery under a $3 billion standby arrangement with the IMF secured last summer to avert a sovereign default, and is hoping to sign a longer term programme.

Pakistan's key rate was last raised in June to fight persistent inflationary pressures and to meet one of the conditions set by the IMF for securing the bailout. Reforms under the programme have complicated the task of keeping price pressures in check. Inflation, however, has slowed its pace primarily due to high base effect. Pakistan's consumer price index (CPI) for March was up 20.7% from the same month last year, the lowest reading in nearly two years and below the finance ministry's projections for the month.