CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
MPC stands for:
A. Monetary Policy Committee
B. Market Pricing Council
C. Monetary Planning Commission
D. Macroeconomic Policy Council
Correct Answer: A
The statutory decision-making body for monetary policy is the Monetary Policy Committee.
CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
The current SBP inflation target is best described as:
A. A fixed exchange-rate peg
B. A monthly money-supply ceiling
C. A legal maximum wage
D. A medium-term target range
Correct Answer: D
SBP follows a medium-term inflation range of 5–7 percent.
CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
The current monetary-policy framework is designed primarily to influence:
A. Election turnout
B. Provincial boundaries
C. Inflation and aggregate economic activity
D. Cricket rankings
Correct Answer: C
Interest rates influence borrowing, spending, investment and ultimately inflation and economic activity.
CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
Which institution sets Pakistan's medium-term inflation target that guides the SBP?
A. IMF alone
B. Government of Pakistan
C. World Bank alone
D. Pakistan Stock Exchange
Correct Answer: B
The SBP Act definition of price stability refers to the government's medium-term inflation target.
CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
Which rate can adjust quickly after an MPC decision even though the broader economy responds more slowly?
A. Overnight repo rate
B. Population growth rate
C. Literacy rate
D. Long-run productivity growth
Correct Answer: A
Short-term money-market rates can adjust quickly while output and inflation respond with lags.
CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
According to the SBP, full monetary-policy effects on growth and inflation may take approximately:
A. 1–2 days
B. 1–2 weeks
C. 10–15 years
D. 1–2 years
Correct Answer: D
SBP notes that full effects often take one to two years to materialize.
CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
Monetary policy affects the economy:
A. Instantly and fully
B. Only after a constitutional amendment
C. With a time lag
D. Only once every decade
Correct Answer: C
Interest-rate changes transmit gradually through financial conditions, spending, production and prices.
CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
Why is price stability important according to the SBP?
A. It guarantees profits to every business
B. It helps businesses and households plan saving, consumption and investment
C. It removes all exchange-rate changes
D. It fixes wages permanently
Correct Answer: B
Low and stable inflation improves the predictability needed for economic decision-making.
CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
An easier monetary-policy stance generally aims to:
A. Stimulate economic activity by reducing borrowing costs
B. Increase borrowing costs deliberately
C. Raise customs duties
D. Reduce agricultural output
Correct Answer: A
Lower interest rates can encourage borrowing, investment and consumption when inflation conditions allow.
CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
A tighter monetary-policy stance generally means:
A. Lower borrowing costs and stronger demand
B. Automatic tax cuts
C. Automatic currency appreciation
D. Higher borrowing costs and restraint on demand
Correct Answer: D
Tighter policy raises the cost of money and tends to moderate demand and inflationary pressure.
CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
Does the SBP currently set a formal intermediate target for M2 growth or the exchange rate?
A. Yes, for both
B. Yes, for M2 only
C. No
D. Yes, for exchange rate only
Correct Answer: C
SBP states that it currently does not set an intermediate target for a nominal variable such as M2 growth or the exchange rate.
CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
Which variable implicitly serves as the nominal anchor in Pakistan's current monetary-policy approach?
A. M2 growth as a formal target
B. Inflation and the inflation forecast
C. A fixed PKR/USD rate
D. Gold reserves only
Correct Answer: B
SBP says it currently does not set a formal intermediate nominal target; inflation and its forecast implicitly serve as the nominal anchor.
CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
The operational target of Pakistan's monetary-policy framework is to keep which rate close to the SBP policy rate?
A. Interbank overnight repo rate
B. 30-year mortgage rate
C. Export rebate rate
D. National Savings prize rate
Correct Answer: A
SBP uses liquidity operations to keep the overnight money-market repo rate close to the policy target rate.
CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
The principal monetary-policy instrument used by the SBP is the:
A. Sales tax rate
B. Customs tariff
C. Corporate income-tax rate
D. Policy rate
Correct Answer: D
SBP describes the policy rate as its main monetary-policy instrument.
CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
Monetary policy mainly manages a country's:
A. Constitutional amendments and elections
B. Import licenses only
C. Money supply and interest rates
D. Agricultural land records
Correct Answer: C
Monetary policy manages money and interest-rate conditions to influence inflation and economic activity.
CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
Subject to price and financial stability, the SBP supports:
A. Only private-bank policies
B. The government's general economic policies
C. Foreign central banks' fiscal policies
D. Political-party manifestos
Correct Answer: B
The SBP Act directs the Bank to support the government's general economic policies while respecting its primary and secondary objectives.
CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
Without prejudice to its price-stability objective, the SBP is also required to contribute to:
A. Stability of Pakistan's financial system
B. A fixed stock-market index
C. Provincial tax collection only
D. Commodity export quotas
Correct Answer: A
Financial-system stability is the SBP's secondary statutory objective after price stability.
CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
What medium-term inflation target range is being followed by the SBP?
A. 2–4 percent
B. 8–10 percent
C. 10–12 percent
D. 5–7 percent
Correct Answer: D
SBP states that it follows a medium-term inflation target of 5–7 percent.
CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
According to the SBP Act, price stability means maintaining:
A. A permanently fixed exchange rate
B. Zero taxes
C. Low and stable inflation
D. A trade surplus every month
Correct Answer: C
Price stability is defined as the maintenance of low and stable inflation guided by the government's medium-term inflation target.
CSS - PMS - CCE - PCS - Current Affairs (C.A)
Pakistan Monetary Policy 2026
What is the primary objective of the State Bank of Pakistan under Section 4B of the SBP Act?
A. Maximize government borrowing
B. Achieve and maintain domestic price stability
C. Set stock-market prices
D. Control international oil prices
Correct Answer: B
Section 4B makes domestic price stability the SBP's primary objective.