Pakistan Holds Key Rate at Third Meeting to Curb Inflation

Pakistan’s central bank left interest rates unchanged for a third straight meeting to contain a rebound in inflation and support the rupee.

The State Bank of Pakistan kept the target policy rate at 6 percent, Governor Ashraf Mahmood Wathra said in a statement in Karachi on Saturday. The move was predicted by 18 of 19 analysts in a Bloomberg survey, with one seeing a cut to 5.5 percent.

“The rise in inflation was anticipated and the benign inflation outlook for the remaining months of fiscal year ending June 30 remains largely unchanged,” the State Bank of Pakistan said. The central bank expects average inflation to remain between 3 percent and 4 percent in the period, according to a statement in January.

Prime Minister Nawaz Sharif’s administration is looking to boost growth to a nine-year high without stoking inflation that accelerated to the fastest pace in 14 months this February. The rupee is among Asia’s worst-performing currencies this year, depriving Pakistan of the chance to follow neighbor India into more monetary easing.

“Pakistan’s interest rates are currently at rock-bottom levels and we also do not expect a hike this year amid weak global oil and other commodities," Fahad Hussain Khan, an analyst at Adam Securities Pvt. in Karachi, said by phone before the decision. "The dynamics may change if oil rebounds in 2017.”

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