Islamabad: State Bank of Pakistan on Monday announced an increase of 25 basis points in the benchmark policy rate taking it to 7.25 per cent for the next two months effective from October 1, 2021.

“Since its last meeting in July, the Monetary Policy Committee (MPC) noted that the pace of the economic recovery has exceeded expectations, ” the SBP said in a statement, adding that the robust recovery in domestic demand, coupled with higher international commodity prices, was leading to a strong pick-up in imports and a rise in the current account deficit.

In July, the SBP had kept the policy rate unchanged at 7pc with Governor Dr Reza Baqir saying the policy rate had been kept at 7pc for more than a year to support the economy during the Covid-19 pandemic.

In its latest statement, the SBP underlined that the economic recovery now appeared less vulnerable to “pandemic-related uncertainty”.