Pakistan's Central Bank Holds Steady on Policy Rate Amid Inflation Concerns

The State Bank of Pakistan has decided to keep its policy rate at 12% amidst potential inflation risks. Despite February's lower-than-expected inflation due to falling food and energy prices, core inflation remains high. Economic activity shows improvement, but external pressures persist with rising imports and weak inflows.

The State Bank of Pakistan announced on Monday that it will maintain its policy rate at 12%, citing looming inflationary pressures in the short term.

This decision, based on the Monetary Policy Committee's findings, arises despite a lower-than-anticipated inflation rate in February, attributed to reduced food and energy costs.

While economic indicators suggest improvement, concerns over external account pressures remain due to increasing imports and tepid financial inflows, as the IMF reviews its ongoing USD 7 billion bailout package with Pakistan.