KARACHI: Pakistan’s State Bank has chosen to keep the interest rate the same at 13.25 per cent, saying supply-side inflation continued to exert economic pressure.

State Bank Governor Reza Baqir said inflation stood at 8.4 per cent when the monetary policy committee decided on the interest rate in July.

“A few months after that, inflation rate kept on increasing. It [inflation rate] kept on increasing after that. Most recently, it stood at 12.4 percent,” he said.

The governor of the state bank said inflation had increased as a result of rising food prices and a rise in utility bills. He said the economic team claimed that inflation would decline to about five to six per cent in the coming days.

He said inflation expectations were “strong and constant” adding that inflation would decrease but when that would happen was hard to predict.

“We know inflation will go down in the long run,” he said.

The governor of the SBP said the real interest rate was determining whether a monetary policy was ‘loose or tight.’

He said past records showed that, on average, the real interest rate was 3%. “Our real interest rate is under average,” he said.