SBP announces monetary policy, increases interest rate to 12.25pc.

The State Bank of Pakistan (SBP) on Monday announced its monetary policy, increasing its benchmark interest rate by 150 basis points (bps) to 12.25 per cent, effective from May 21.

"The monetary policy committee [of the SBP] noted that further policy measures are required to address underlying inflationary pressures from higher recent month-on-month headline and core inflation outturns, recent exchange rate depreciation, an elevated fiscal deficit and its increased monetisation, and potential adjustments in utility tariffs," read an SBP statement.

The bank's estimates showed that economic growth was expected to slow in Fiscal Year 19 but rise modestly in Fiscal Year 20.

This slowdown is mostly due to lower growth in agriculture and industry. More than two-thirds of real GDP growth in FY19 is expected to come from services.

"Going forward, some gradual recovery in economic activity is expected on the back of...