KARACHI: The profit rate on savings accounts will rise by 1.5 percentage points to a minimum of 7.25 per cent by Dec 1, the State Bank said on Monday.

The announcement came after the central bank raised the policy rate last week to 8.75pc from 7.25pc.

The central bank through a social media platform also asked customers to file a complaint with their bank if it gives less profit on the savings account.

In case of non-compliance by the bank, the SBP asked the depositors to contact its customer complaint help desk.

For opening a savings account, the SBP informed the customers to visit the bank of their choice. From January 2022, it has been made mandatory for banks to provide the option to open bank accounts digitally with remote biometric verification and without the need for a customer to visit a bank branch.

The SBP also clarified that the inflation forecast is 5pc to 7pc for the current fiscal year and not 7pc to 9pc as being interpreted in some sections of the media.

“In some sections of the media, SBP’s average inflation forecast of 7-9pc in FY22 is being interpreted as the ‘inflation target’ and being compared to the inflation targets of other countries. This is incorrect,” the central bank said in a press release on Monday.

“SBP’s inflation forecast represents our projections for the current fiscal year. On the other hand, Pakistan’s inflation target is set by the government and is 5 – 7pc. This target is to be achieved over the medium term,” the SBP said. “Monetary policy is anchored on achieving the government’s inflation target over the medium term, i.e. over the next 18-24 months.”

Fahad Rauf of Ismail Iqbal Securities said the inflation targeting regime, as indicated by the IMF, would be the focus of the central bank in making monetary decisions.

The SBP amendment bill, which is yet to materialise, also highlights the central bank’s objectives like price stability, financial stability and economic development, he said.

Mr Rauf was of the view that considering current inflation outlook, interest rate would increase by another 100-150bps to achieve mildly positive rates.

Published in Dawn, November 23rd, 2021