(Bloomberg) -- Pakistan held its benchmark interest rate steady for the first time in four meetings, opting to watch the effects of previous increases on Asia’s fastest inflation.
The State Bank of Pakistan kept the target rate unchanged at 9.75%, Governor Reza Baqir told reporters in Karachi on Monday. Thirty-nine of the 43 economists surveyed by Bloomberg predicted the decision, while the rest forecast a hike in the range of 25 to 50 basis points.
The decision is in line with the authority’s intent to monitor developments affecting financial stability and economic growth, even as it expects previous increases to temper domestic demand and cool inflation next fiscal year. The pause -- which comes after the central bank delivered 275 basis points of increases since September -- is expected to support a recovery in the economy amid looming risks from the omicron variant of coronavirus.
While the SBP sees inflation -- which came in at 12.3% in December -- staying elevated for a bit due to higher international prices, it cut the gross domestic product growth forecast to 4.5% for the fiscal year ending June from close to 5% seen previously.
The International Monetary Fund’s board is due to review a $6 billion loan program for Pakistan on Jan. 28.
(Updates with inflation and growth forecasts in the fourth paragraph.)
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