Rising inflation as well as current account and fiscal deficits were likely to compromise sustainability of a high real economic growth path, it said. So far, in the first two months of FY19, the headline CPI inflation has averaged 5.8% as compared to 3.2% for the corresponding months of FY18,” it said. Monetary policy: SBP raises key interest rate by 50 basis points to 6.5%“In light of the current and evolving macroeconomic situation…, the MPC (Monetary Policy Committee) is of the view that further consolidation efforts are required to ensure macroeconomic stability and therefore has decided to raise the SBP target policy rate by 100 bps to 8.5% effective October 1, 2018,” the SBP said. Specifically, the impact of the SBP’s policy rate hikes by 175 basis points to 7.5% from January-July 2018 is still being felt. As a result, domestic demand is projected to decelerate in coming months of FY19, it said.

Source: The Express Tribune September 29, 2018 14:35 UTC