(MENAFN- Kuwait News Agency (KUNA)) ISLAMABAD, Nov 25 (KUNA) -- The State Bank of Pakistan on Friday announced that it had increased the policy interest rate by 100 basis points to 16 percent to curb inflation.
The decision aims to ensure that 'elevated inflation does not become entrenched and that risks to financial stability are contained, thus paving the way for higher growth on a more sustainable basis,' according to a press release by the central bank of the country.
The announcement came after a meeting of the bank's Monetary Policy Committee which projects the growth for the financial year 2023 and the current account deficit the same as the last policy statement at 2 percent and 3percent of the GDP, respectively.
The Monetary Policy Committee views that the inflationary pressures have proven to be stronger and more persistent than expected.
It further noted that amid the ongoing economic slowdown, inflation was increasingly being driven by persistent global and domestic supply shocks that were raising costs.
'The Monetary Policy Committee noted that the short-term costs of bringing inflation down are lower than the long-term costs of allowing it to become entrenched.
'At the same time, curbing food inflation through administrative measures to resolve supply-chain bottlenecks and any necessary imports remains a high priority,' the press release reads.
The State Bank raised interest rates by 525 basis points this year but maintained rates in the last two monetary policy meetings. (end)
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