KARACHI: On Monday, the State Bank of Pakistan (SBP) reiterated that the central bank’s current fiscal year average inflation prediction of 7-9 percent is not an “inflation objective.”
“In some sections of the media, SBP’s average inflation forecast of 7-9% in FY22 is being interpreted as the “inflation target” and being compared to the inflation targets of other countries. This is incorrect,” a statement issued by the SBP said.
It said the SBP’s inflation forecast represents its projections for the current fiscal year. On the other hand, Pakistan’s inflation target is set by the government, which is 5-7 %, it added.
The central bank explained that this target is to be achieved over the medium term as the monetary policy is anchored on achieving the government’s inflation target over the medium term, i.e. over the next 18-24 months.
Last week, the State Bank of Pakistan raised the interest rate by 150 basis points to 8.75 per cent for the next two months while keeping in view the risks related to inflation and the balance of payments.
The change in interest rate reflects the monetary policy committee’s opinion that risks connected to inflation and the balance of payments have grown since the last meeting, but the outlook for growth has continued to strengthen, according to the SBP.
