Stabilization measures start yielding results: SBP Governor.

ISLAMABAD -- Governor State Bank of Pakistan (SBP), Jameel Ahmad said on Friday that stabilization measures had started yielding results with inflation coming down and position of external account improving.

The governor was briefing international investors during events organized by global banks, including Barclays, JP Morgan, Standard Bank, and Jefferies on the sidelines of the IMF-World Bank meetings in Marrakech, Morocco.

He said, inflation had come down to 31.4 percent in September 2023 after peaking at 38.0 percent in May 2023 and was expected to continue its downward trajectory over the coming months, whereas the external account had improved considerably and foreign exchange buffers were being built up.

Jameel shared that with the policy rate at 22 percent, the SBP assessed the real interest rates turning substantially positive on a forward-looking basis, as inflation was expected to come down significantly during the second half of this fiscal year.

Going forward, the Stand-By arrangement with the International Monetary Fund (IMF) is expected to support the ongoing policy efforts to stabilize the economy.

The governor briefed the investors about the recent macroeconomic developments, policy responses to current challenges, and the outlook of Pakistan's economy, and also answered their questions.

He informed the investors that the current policy mix adopted by the government and the Central Bank was geared towards achieving stabilization through addressing macroeconomic imbalances.

He apprised that the SBP was among the first central banks that began to tighten monetary policy in the wake of the rising inflation globally.

However, certain domestic challenges, most notably the unprecedented floods in the beginning of the previous fiscal year, complicated SBP's efforts to bring down inflation.

On a cumulative basis, SBP has increased the policy rate by 1500 bps over the last two years. Likewise, the government has also stepped up its fiscal consolidation efforts.

The governor also highlighted the shock-absorbing role of the market-determined exchange rate and the support from multilateral and bilateral lenders in addressing the external sector challenges.

The current account deficit (CAD) reduced to 0.7 percent of GDP in FY23...