KARACHI: Pakistan’s central bank on Saturday announced it would keep its key policy rate unchanged at 12 per cent for the next two months in a bid to contain expected inflation in the second half of the 2011-12 fiscal year.

Since the start of the fiscal year last July, the central bank has cut interest rates by 200 basis points, but has kept its policy rate unchanged since October.

The State Bank of Pakistan (SBP) faces greater-than-expected drawdowns in its foreign exchange reserves and higher government deficit financing from domestic markets.

“Against this backdrop, the central board of directors of the State Bank today consider the 200 basis points reduction of policy rate already introduced in fiscal year 2012 to be appropriate and has decided to keep the policy rate unchanged at 12 per cent,” central bank governor Yaseen Anwar said at a news conference. read more