Pakistan Holds Key Rate At 6.50%

(RTTNews) - Pakistan's central bank left its new target rate unchanged on Saturday as floods are likely to lift inflationary pressure.

The Board of Directors of the State Bank of Pakistan maintained its target rate at 6.50 percent, the bank said in a statement.

In May, the bank set the "SBP target rate" at 50 basis points below the ceiling rate, which is at 7.00 percent.

After the announcement of new framework in May, the bank ensured that the money market average overnight rate remains close to the new target rate at 6.50 percent.

The bank said its accommodative monetary policy stance was facilitated by a sharp fall in inflation along with its benign outlook and improvement in external account.

Nonetheless, the bank said there is a possibility of upward revision in energy tariffs in FY16 and an adverse impact of floods on production of perishable food items going forward that could have an upward pressure on inflation.

Given the recent fall in inflation amid decreasing international oil prices, this could result in keeping inflation on the lower side, the bank said.