As Pakistan battles with consumer price inflation, which hit its highest annual level ever of just over 35% in March, the main rate of the State Bank of Pakistan (SBP) now stands at a record 21%. The Pakistani rupee reached an all-time low of 287.29 against the US dollar, losing over 1% in value during the day. The State Bank of Pakistan stated that it believes its current monetary policy stance is appropriate, and that previous monetary tightening measures, combined with the latest decision, will help achieve its medium-term inflation target over the next two years.

Investors who were surveyed by Reuters had largely expected a rate hike of 200 basis points. Inflation in Pakistan has been high due to a weak currency, higher energy tariffs, and increased food prices during Ramadan. This rise in consumer prices has been a global phenomenon, exacerbating the situation in Pakistan.