Pakistan holds steady on interest rates but trims FY22 GDP forecast

Pakistan's central bank held its benchmark interest rate at 9.75% on Monday and signalled that borrowing costs would remain steady for now as recent tax increases were expected to curb demand and reduce the country's budget deficit. "There's no need for further tightening at the moment because of the government's fiscal policy," State Bank of Pakistan governor Reza Baqir told a news conference in Karachi.

Pakistan's finance minister has said the tax changes would raise $1.9 billion. The MPC (monetary policy committee) was of the view that current real interest rates on a forward-looking basis are appropriate to guide inflation to the medium-term range of 5%-7%, support growth, and maintain external stability," the central bank said in statement announcing its rate decision.

The bank also cut its projection for gross domestic product (GDP) for the 2022 financial year which ends on June 30 to about 4.5% from 5% previously.

The governor said that while headline inflation would continue to remain high ‘in the near-term’ due to elevated global commodity prices, its momentum was slowing and was expected to decline during the 2023 fiscal year.

Talks on for Putin’s maiden visit

Pakistan and Russia are in talks to finalise the plan for Russian President Vladimir Putin's first visit to the country this year, according to a media report.

Prime minister Imran Khan has already extended a formal invitation to Putin, he reiterated the invitation during his recent telephonic conversation with Putin. 

The two leaders are also expected to meet in Beijing next month on the sidelines of the opening ceremony of the Winter Olympics. Both sided have been trying to make the visit possible for two years now but irt could not be possible due to various reasons including Covid-19. (PTI)