At its meeting today, the Monetary Policy Committee (MPC) of the centralbank decided against any change in the discount rate and maintained therate at existing seven percent.
The MPC noted that since the last meeting in September, the domesticrecovery has gradually gained traction, in line with expectations forgrowth of slightly above 2 percent in FY21, and
business sentiment has improved.
According to the central bank statement, the recent spike in Covid cases inPakistan and many other countries presents considerable downside risks.While there has been encouraging news on vaccine development, which couldtake some time to fully implement worldwide.
The bank stated that the inflation has been on the higher side, primarilydue to increases in food prices. However, these supply-side pressures arelikely to be temporary and average inflation is expected to fall within thepreviously announced range of 7-9 percent for FY21.
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According to the central bank, recent data suggest a further strengtheningand broadening of the recovery, led by construction and manufacturingsectors.
The bank stated that the sales of Fast Moving Consumer Goods (FMCGs)rebounded in FY21 Q1 and average sales volumes of POL and automobiles havesurpassed their pre-Covid levels of FY20, and cement sales are at anall-time high.
