Pakistan’s central bank left interest rates unchanged after inflation eased to the lowest in at least three and a half years.
The State Bank of Pakistan left the discount rate at 9.5 percent, the lowest level in five years, spokesman Inayat Hussain told reporters in Karachi yesterday. All 20 analysts in a Bloomberg News survey predicted the decision.
“It’s better to hold for now,” said Saad Khan, who helps manage about 11 billion rupees ($112 million) at Askari Investments Management Ltd. in Karachi. “The political situation is unclear and foreign-exchange reserves are depleting.”
The decision comes a month before Pakistan votes for a new government that faces record power outages, falling foreign- exchange reserves and a Taliban insurgency in the northwest. The May 11 election will be the first time power is transferred through the ballot in the nation that has been ruled by the army for half its history.
The rupee has weakened by about 8 percent versus the dollar in the past year, while foreign reserves have declined 21 percent to $11.8 billion in the year started July. A new government will have to go to the International Monetary Fund for a bailout to address its dwindling foreign-exchange reserves, Standard & Poor’s said in a statement on April 4.
Pakistan is scheduled to repay about $7.5 billion to the Washington-based IMF between 2012 and 2015, with $3.2 billion paid as of Feb. 26, according to the central bank. A partially disbursed $11.3 billion loan program expired in September 2011.
The nation’s consumer prices rose 6.57 percent in March, the slowest since Bloomberg started tracking the data in 2009.
-- With assistance from Manish Modi in New Delhi. Editors: Malcolm Scott, Sam Nagarajan
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