The State Bank of Pakistan (SBP) hiked its key interest rate by 50 basis points to 10.75% on Friday citing accelerating inflationary pressure.

The monetary committee of central bank said that pressure has eased on foreign exchange with improved business stability and steadiness.

The State Bank of Pakistan observed that Initial estimates and price inflation reached at the highest annual increase. With the latest hike, the key interest rate has surged to total of five percentage points since January 2018.

The current deficit narrowed to $8 billion in the first quarter of the fiscal year 2019 compared to $11 billion during the last year.

The sharp weakening in the value of Pakistani rupee which has depreciated against the US dollar in the inter-bank market has put pressure on trading market.