Contrary to the market expectation, monetary policy committee has raised the policy rate by 25bps to 7.25% for the next two months, which indicates end of the monetary easing which took place in March 2020 to mitigate the impact of pandemic.

Since its last meeting, MPC noted pace of economic recovery has exceeded the expectations and this recovery now appears less vulnerable to pandemic related uncertainty.

The SBP indicates the policy shift change towards gradual tapering the interest rates for normal monetary policy. (Courtesy – Spectrum Research)