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SBP catches markets off guard with cut

State Bank of Pakistan’s MPC votes for rate cut after being split in April

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The SBP surprised with a rate cut on May 21. Photo: SBP/Abbas Ali Khan

The State Bank of Pakistan (SBP) cut its policy rate on May 21 - surprising markets after a knife-edge decision in April tipped the other way.

The 25 basis point cut came despite the seventh consecutive rise month of rising inflation, bringing annual CPI inflation to 4.2% in April.

Although this is below the 6% target, the central bank says inflation is "likely to attain a higher plateau" in the 2017 financial year, which begins in July. Seasonal food price rises and the fading of base effects

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